Correlation Between Postmedia Network and Dream Industrial

Can any of the company-specific risk be diversified away by investing in both Postmedia Network and Dream Industrial 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 Dream Industrial 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 Dream Industrial Real, you can compare the effects of market volatilities on Postmedia Network and Dream Industrial 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 Dream Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Postmedia Network and Dream Industrial.

Diversification Opportunities for Postmedia Network and Dream Industrial

0.75

Correlation Coefficient

Postmedia Network  Dream Industrial

Poor diversification

The 3 months correlation between Postmedia and Dream is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Postmedia Network Canada and Dream Industrial Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dream Industrial Real 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 Dream Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dream Industrial Real has no effect on the direction of Postmedia Network i.e., Postmedia Network and Dream Industrial go up and down completely randomly.

Pair Corralation between Postmedia Network and Dream Industrial

Assuming the 90 days trading horizon Postmedia Network Canada is expected to generate 2.19 times more return on investment than Dream Industrial. However, Postmedia Network is 2.19 times more volatile than Dream Industrial Real. It trades about -0.02 of its potential returns per unit of risk. Dream Industrial Real is currently generating about -0.26 per unit of risk. If you would invest  119.00  in Postmedia Network Canada on September 24, 2024 and sell it today you would lose (2.00) from holding Postmedia Network Canada or give up 1.68% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Postmedia Network Canada  vs.  Dream Industrial Real

Postmedia Network Canada

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Postmedia Network Canada has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Dream Industrial Real

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dream Industrial Real has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Postmedia Network and Dream Industrial

The main advantage of trading using opposite Postmedia Network and Dream Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Postmedia Network position performs unexpectedly, Dream Industrial 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 Dream Industrial will offset losses from the drop in Dream Industrial's long position.

The idea behind Postmedia Network Canada and Dream Industrial Real pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.