Correlation Between Postmedia Network and WSP Global

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

Diversification Opportunities for Postmedia Network and WSP Global

0.09

Correlation Coefficient

Postmedia Network  WSP Global

Significant diversification

The 3 months correlation between Postmedia and WSP is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Postmedia Network Canada and WSP Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WSP Global 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 WSP Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WSP Global has no effect on the direction of Postmedia Network i.e., Postmedia Network and WSP Global go up and down completely randomly.

Pair Corralation between Postmedia Network and WSP Global

Assuming the 90 days trading horizon Postmedia Network Canada is expected to under-perform the WSP Global. In addition to that, Postmedia Network is 2.96 times more volatile than WSP Global. It trades about -0.03 of its total potential returns per unit of risk. WSP Global is currently generating about -0.02 per unit of volatility. If you would invest  25,303  in WSP Global on December 23, 2024 and sell it today you would lose (762.00) from holding WSP Global or give up 3.01% of portfolio value over 90 days.

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

Postmedia Network Canada  vs.  WSP Global

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 latest unfluctuating performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

WSP Global

Risk-Adjusted Performance

Very Weak

Over the last 90 days WSP Global has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, WSP Global is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Postmedia Network and WSP Global

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

The idea behind Postmedia Network Canada and WSP Global 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..