Correlation Between St James’s and Cogent Communications
Can any of the company-specific risk be diversified away by investing in both St James’s and Cogent Communications 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 St James’s and Cogent Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between St Jamess Place and Cogent Communications Holdings, you can compare the effects of market volatilities on St James’s and Cogent Communications 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 St James’s with a short position of Cogent Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of St James’s and Cogent Communications.
Diversification Opportunities for St James’s and Cogent Communications
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between 1IV and Cogent is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding St Jamess Place and Cogent Communications Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogent Communications and St James’s 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 St Jamess Place are associated (or correlated) with Cogent Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cogent Communications has no effect on the direction of St James’s i.e., St James’s and Cogent Communications go up and down completely randomly.
Pair Corralation between St James’s and Cogent Communications
Assuming the 90 days horizon St Jamess Place is expected to generate 0.89 times more return on investment than Cogent Communications. However, St Jamess Place is 1.12 times less risky than Cogent Communications. It trades about 0.3 of its potential returns per unit of risk. Cogent Communications Holdings is currently generating about -0.01 per unit of risk. If you would invest 974.00 in St Jamess Place on September 14, 2024 and sell it today you would earn a total of 99.00 from holding St Jamess Place or generate 10.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
St Jamess Place vs. Cogent Communications Holdings
Performance |
| Timeline |
| St Jamess Place |
| Cogent Communications |
St James’s and Cogent Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with St James’s and Cogent Communications
The main advantage of trading using opposite St James’s and Cogent Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if St James’s position performs unexpectedly, Cogent Communications 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 Cogent Communications will offset losses from the drop in Cogent Communications' long position.| St James’s vs. Cogent Communications Holdings | St James’s vs. Mobilezone Holding AG | St James’s vs. Digilife Technologies Limited | St James’s vs. ACCSYS TECHPLC EO |
| Cogent Communications vs. Superior Plus Corp | Cogent Communications vs. SIVERS SEMICONDUCTORS AB | Cogent Communications vs. Norsk Hydro ASA | Cogent Communications vs. Reliance Steel Aluminum |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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