Correlation Between Rogers Communications and Postmedia Network

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

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

Diversification Opportunities for Rogers Communications and Postmedia Network

0.54

Correlation Coefficient

Rogers Communications  Postmedia Network

Very weak diversification

The 3 months correlation between Rogers and Postmedia is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Rogers Communications 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 Rogers Communications 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 Rogers Communications 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 Rogers Communications i.e., Rogers Communications and Postmedia Network go up and down completely randomly.

Pair Corralation between Rogers Communications and Postmedia Network

Assuming the 90 days trading horizon Rogers Communications is expected to under-perform the Postmedia Network. But the stock apears to be less risky and, when comparing its historical volatility, Rogers Communications is 3.1 times less risky than Postmedia Network. The stock trades about -0.1 of its potential returns per unit of risk. The Postmedia Network Canada is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  117.00  in Postmedia Network Canada on October 24, 2024 and sell it today you would earn a total of  24.00  from holding Postmedia Network Canada or generate 20.51% return on investment over 90 days.

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

Rogers Communications  vs.  Postmedia Network Canada

Rogers Communications

Risk-Adjusted Performance

0 of 100

Very Weak

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

Postmedia Network Canada

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Postmedia Network Canada are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Postmedia Network may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Rogers Communications and Postmedia Network

The main advantage of trading using opposite Rogers Communications and Postmedia Network positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rogers Communications 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 Rogers Communications 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.