Correlation Between Sun Lif and Postmedia Network

Can any of the company-specific risk be diversified away by investing in both Sun Lif and Postmedia Network 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 Sun Lif and Postmedia Network into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sun Lif Non and Postmedia Network Canada, you can compare the effects of market volatilities on Sun Lif and Postmedia Network 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 Sun Lif with a short position of Postmedia Network. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Lif and Postmedia Network.

Diversification Opportunities for Sun Lif and Postmedia Network

0.29

Correlation Coefficient

Sun Lif  Postmedia Network

Modest diversification

The 3 months correlation between Sun and Postmedia is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Sun Lif Non and Postmedia Network Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Postmedia Network Canada and Sun Lif 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 Sun Lif Non are associated (or correlated) with Postmedia Network. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Postmedia Network Canada has no effect on the direction of Sun Lif i.e., Sun Lif and Postmedia Network go up and down completely randomly.

Pair Corralation between Sun Lif and Postmedia Network

Assuming the 90 days trading horizon Sun Lif Non is expected to generate 0.33 times more return on investment than Postmedia Network. However, Sun Lif Non is 3.01 times less risky than Postmedia Network. It trades about 0.04 of its potential returns per unit of risk. Postmedia Network Canada is currently generating about 0.01 per unit of risk. If you would invest  1,707  in Sun Lif Non on September 13, 2024 and sell it today you would earn a total of  199.00  from holding Sun Lif Non or generate 11.66% return on investment over 90 days.

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

Sun Lif Non  vs.  Postmedia Network Canada

Sun Lif Non

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sun Lif Non has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Sun Lif is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

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 comparatively stable basic indicators, Postmedia Network is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Sun Lif and Postmedia Network

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

The idea behind Sun Lif Non and Postmedia Network Canada 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.