Correlation Between Diamond Estates and Postmedia Network

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

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

Diversification Opportunities for Diamond Estates and Postmedia Network

0.55

Correlation Coefficient

Diamond Estates  Postmedia Network

Very weak diversification

The 3 months correlation between Diamond and Postmedia is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Estates Wines 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 Diamond Estates 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 Diamond Estates Wines 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 Diamond Estates i.e., Diamond Estates and Postmedia Network go up and down completely randomly.

Pair Corralation between Diamond Estates and Postmedia Network

Assuming the 90 days horizon Diamond Estates Wines is expected to generate 1.01 times more return on investment than Postmedia Network. However, Diamond Estates is 1.01 times more volatile than Postmedia Network Canada. It trades about -0.03 of its potential returns per unit of risk. Postmedia Network Canada is currently generating about -0.1 per unit of risk. If you would invest  21.00  in Diamond Estates Wines on December 23, 2024 and sell it today you would lose (2.00) from holding Diamond Estates Wines or give up 9.52% of portfolio value over 90 days.

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

Diamond Estates Wines  vs.  Postmedia Network Canada

Diamond Estates Wines

Risk-Adjusted Performance

Very Weak

Over the last 90 days Diamond Estates Wines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Postmedia Network Canada

Risk-Adjusted Performance

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 April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Diamond Estates and Postmedia Network

The main advantage of trading using opposite Diamond Estates and Postmedia Network positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamond Estates 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 Diamond Estates Wines 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.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.