Correlation Between Postmedia Network and Broadcom

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

Diversification Opportunities for Postmedia Network and Broadcom

0.32

Correlation Coefficient

Postmedia Network  Broadcom

Weak diversification

The 3 months correlation between Postmedia and Broadcom is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Postmedia Network Canada and Broadcom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broadcom 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 Broadcom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Broadcom has no effect on the direction of Postmedia Network i.e., Postmedia Network and Broadcom go up and down completely randomly.

Pair Corralation between Postmedia Network and Broadcom

Assuming the 90 days trading horizon Postmedia Network is expected to generate 4.24 times less return on investment than Broadcom. In addition to that, Postmedia Network is 1.59 times more volatile than Broadcom. It trades about 0.05 of its total potential returns per unit of risk. Broadcom is currently generating about 0.36 per unit of volatility. If you would invest  4,160  in Broadcom on April 23, 2025 and sell it today you would earn a total of  2,400  from holding Broadcom or generate 57.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Postmedia Network Canada  vs.  Broadcom

Postmedia Network Canada

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Postmedia Network Canada are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Postmedia Network may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Broadcom

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Broadcom are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Broadcom exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Postmedia Network and Broadcom

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

The idea behind Postmedia Network Canada and Broadcom 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.