Correlation Between Zoom Video and Cogent Communications
Can any of the company-specific risk be diversified away by investing in both Zoom Video 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 Zoom Video and Cogent Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zoom Video Communications and Cogent Communications Holdings, you can compare the effects of market volatilities on Zoom Video 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 Zoom Video with a short position of Cogent Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zoom Video and Cogent Communications.
Diversification Opportunities for Zoom Video and Cogent Communications
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Zoom and Cogent is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Zoom Video Communications and Cogent Communications Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogent Communications and Zoom Video 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 Zoom Video Communications 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 Zoom Video i.e., Zoom Video and Cogent Communications go up and down completely randomly.
Pair Corralation between Zoom Video and Cogent Communications
Assuming the 90 days trading horizon Zoom Video is expected to generate 1.45 times less return on investment than Cogent Communications. But when comparing it to its historical volatility, Zoom Video Communications is 1.07 times less risky than Cogent Communications. It trades about 0.04 of its potential returns per unit of risk. Cogent Communications Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 5,194 in Cogent Communications Holdings on August 31, 2024 and sell it today you would earn a total of 2,556 from holding Cogent Communications Holdings or generate 49.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.74% |
| Values | Daily Returns |
Zoom Video Communications vs. Cogent Communications Holdings
Performance |
| Timeline |
| Zoom Video Communications |
| Cogent Communications |
Zoom Video and Cogent Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zoom Video and Cogent Communications
The main advantage of trading using opposite Zoom Video and Cogent Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zoom Video 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.| Zoom Video vs. GAMESTOP | Zoom Video vs. GEAR4MUSIC LS 10 | Zoom Video vs. International Game Technology | Zoom Video vs. TROPHY GAMES DEV |
| Cogent Communications vs. ATT Inc | Cogent Communications vs. Deutsche Telekom AG | Cogent Communications vs. Superior Plus Corp | Cogent Communications vs. NMI Holdings |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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