Correlation Between SBA Communications and Cogent Communications
Can any of the company-specific risk be diversified away by investing in both SBA Communications 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 SBA Communications and Cogent Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SBA Communications Corp and Cogent Communications Holdings, you can compare the effects of market volatilities on SBA Communications 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 SBA Communications with a short position of Cogent Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBA Communications and Cogent Communications.
Diversification Opportunities for SBA Communications and Cogent Communications
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SBA and Cogent is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding SBA Communications Corp and Cogent Communications Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogent Communications and SBA 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 SBA Communications Corp 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 SBA Communications i.e., SBA Communications and Cogent Communications go up and down completely randomly.
Pair Corralation between SBA Communications and Cogent Communications
Assuming the 90 days trading horizon SBA Communications Corp is expected to under-perform the Cogent Communications. But the stock apears to be less risky and, when comparing its historical volatility, SBA Communications Corp is 1.18 times less risky than Cogent Communications. The stock trades about -0.06 of its potential returns per unit of risk. The Cogent Communications Holdings is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 7,406 in Cogent Communications Holdings on August 27, 2024 and sell it today you would earn a total of 494.00 from holding Cogent Communications Holdings or generate 6.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBA Communications Corp vs. Cogent Communications Holdings
Performance |
| Timeline |
| SBA Communications Corp |
| Cogent Communications |
SBA Communications and Cogent Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBA Communications and Cogent Communications
The main advantage of trading using opposite SBA Communications and Cogent Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBA Communications 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.| SBA Communications vs. National Beverage Corp | SBA Communications vs. METHODE ELECTRONICS | SBA Communications vs. MOLSON RS BEVERAGE | SBA Communications vs. ARROW ELECTRONICS |
| Cogent Communications vs. T Mobile | Cogent Communications vs. ATT Inc | Cogent Communications vs. Deutsche Telekom AG |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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