Correlation Between Hollywood Bowl and Cogent Communications
Can any of the company-specific risk be diversified away by investing in both Hollywood Bowl 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 Hollywood Bowl and Cogent Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hollywood Bowl Group and Cogent Communications Holdings, you can compare the effects of market volatilities on Hollywood Bowl 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 Hollywood Bowl with a short position of Cogent Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hollywood Bowl and Cogent Communications.
Diversification Opportunities for Hollywood Bowl and Cogent Communications
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hollywood and Cogent is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Hollywood Bowl Group and Cogent Communications Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogent Communications and Hollywood Bowl 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 Hollywood Bowl Group 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 Hollywood Bowl i.e., Hollywood Bowl and Cogent Communications go up and down completely randomly.
Pair Corralation between Hollywood Bowl and Cogent Communications
Assuming the 90 days horizon Hollywood Bowl is expected to generate 9.87 times less return on investment than Cogent Communications. But when comparing it to its historical volatility, Hollywood Bowl Group is 1.2 times less risky than Cogent Communications. It trades about 0.01 of its potential returns per unit of risk. Cogent Communications Holdings is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 5,493 in Cogent Communications Holdings on September 3, 2024 and sell it today you would earn a total of 2,207 from holding Cogent Communications Holdings or generate 40.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hollywood Bowl Group vs. Cogent Communications Holdings
Performance |
| Timeline |
| Hollywood Bowl Group |
| Cogent Communications |
Hollywood Bowl and Cogent Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hollywood Bowl and Cogent Communications
The main advantage of trading using opposite Hollywood Bowl and Cogent Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hollywood Bowl 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.| Hollywood Bowl vs. ECHO INVESTMENT ZY | Hollywood Bowl vs. SPORTING | Hollywood Bowl vs. New Residential Investment | Hollywood Bowl vs. MGIC INVESTMENT |
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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