Correlation Between Franco Nevada and Cogent Communications
Can any of the company-specific risk be diversified away by investing in both Franco Nevada 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 Franco Nevada and Cogent Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franco Nevada and Cogent Communications Holdings, you can compare the effects of market volatilities on Franco Nevada 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 Franco Nevada with a short position of Cogent Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franco Nevada and Cogent Communications.
Diversification Opportunities for Franco Nevada and Cogent Communications
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Franco and Cogent is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Franco Nevada and Cogent Communications Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogent Communications and Franco Nevada 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 Franco Nevada 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 Franco Nevada i.e., Franco Nevada and Cogent Communications go up and down completely randomly.
Pair Corralation between Franco Nevada and Cogent Communications
Assuming the 90 days horizon Franco Nevada is expected to generate 1.17 times more return on investment than Cogent Communications. However, Franco Nevada is 1.17 times more volatile than Cogent Communications Holdings. It trades about 0.23 of its potential returns per unit of risk. Cogent Communications Holdings is currently generating about -0.1 per unit of risk. If you would invest 11,365 in Franco Nevada on October 20, 2024 and sell it today you would earn a total of 775.00 from holding Franco Nevada or generate 6.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
Franco Nevada vs. Cogent Communications Holdings
Performance |
| Timeline |
| Franco Nevada |
| Cogent Communications |
Franco Nevada and Cogent Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franco Nevada and Cogent Communications
The main advantage of trading using opposite Franco Nevada and Cogent Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franco Nevada 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.| Franco Nevada vs. ZIJIN MINH UNSPADR20 | Franco Nevada vs. Newmont | Franco Nevada vs. Barrick Gold | Franco Nevada vs. Agnico Eagle Mines |
| Cogent Communications vs. INDOFOOD AGRI RES | Cogent Communications vs. Comba Telecom Systems | Cogent Communications vs. SK TELECOM TDADR | Cogent Communications vs. TYSON FOODS A |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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