Correlation Between Postmedia Network and Nicola Mining
Can any of the company-specific risk be diversified away by investing in both Postmedia Network and Nicola Mining at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Postmedia Network and Nicola Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Postmedia Network Canada and Nicola Mining, you can compare the effects of market volatilities on Postmedia Network and Nicola Mining and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Postmedia Network with a short position of Nicola Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Postmedia Network and Nicola Mining.
Diversification Opportunities for Postmedia Network and Nicola Mining
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Postmedia and Nicola is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Postmedia Network Canada and Nicola Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nicola Mining and Postmedia Network is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Postmedia Network Canada are associated (or correlated) with Nicola Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nicola Mining has no effect on the direction of Postmedia Network i.e., Postmedia Network and Nicola Mining go up and down completely randomly.
Pair Corralation between Postmedia Network and Nicola Mining
Assuming the 90 days trading horizon Postmedia Network Canada is expected to under-perform the Nicola Mining. But the stock apears to be less risky and, when comparing its historical volatility, Postmedia Network Canada is 1.22 times less risky than Nicola Mining. The stock trades about -0.09 of its potential returns per unit of risk. The Nicola Mining is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 28.00 in Nicola Mining on September 10, 2024 and sell it today you would earn a total of 0.00 from holding Nicola Mining or generate 0.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Postmedia Network Canada vs. Nicola Mining
Performance |
Timeline |
Postmedia Network Canada |
Nicola Mining |
Postmedia Network and Nicola Mining Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Postmedia Network and Nicola Mining
The main advantage of trading using opposite Postmedia Network and Nicola Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Postmedia Network position performs unexpectedly, Nicola Mining can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Nicola Mining will offset losses from the drop in Nicola Mining's long position.Postmedia Network vs. Dream Office Real | Postmedia Network vs. TGS Esports | Postmedia Network vs. Mako Mining Corp | Postmedia Network vs. Quipt Home Medical |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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