Correlation Between ARISTOCRAT LEISURE and Cogent Communications
Can any of the company-specific risk be diversified away by investing in both ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE and Cogent Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ARISTOCRAT LEISURE and Cogent Communications Holdings, you can compare the effects of market volatilities on ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE with a short position of Cogent Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARISTOCRAT LEISURE and Cogent Communications.
Diversification Opportunities for ARISTOCRAT LEISURE and Cogent Communications
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ARISTOCRAT and Cogent is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding ARISTOCRAT LEISURE and Cogent Communications Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogent Communications and ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE i.e., ARISTOCRAT LEISURE and Cogent Communications go up and down completely randomly.
Pair Corralation between ARISTOCRAT LEISURE and Cogent Communications
Assuming the 90 days trading horizon ARISTOCRAT LEISURE is expected to generate 1.12 times less return on investment than Cogent Communications. But when comparing it to its historical volatility, ARISTOCRAT LEISURE is 2.02 times less risky than Cogent Communications. It trades about 0.28 of its potential returns per unit of risk. Cogent Communications Holdings is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 4,960 in Cogent Communications Holdings on September 3, 2024 and sell it today you would earn a total of 2,740 from holding Cogent Communications Holdings or generate 55.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ARISTOCRAT LEISURE vs. Cogent Communications Holdings
Performance |
| Timeline |
| ARISTOCRAT LEISURE |
| Cogent Communications |
ARISTOCRAT LEISURE and Cogent Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARISTOCRAT LEISURE and Cogent Communications
The main advantage of trading using opposite ARISTOCRAT LEISURE and Cogent Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARISTOCRAT LEISURE 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.| ARISTOCRAT LEISURE vs. TOTAL GABON | ARISTOCRAT LEISURE vs. Walgreens Boots Alliance | ARISTOCRAT LEISURE vs. Peak Resources Limited |
| Cogent Communications vs. T Mobile | Cogent Communications vs. China Mobile Limited | Cogent Communications vs. ATT Inc | Cogent Communications vs. Nippon Telegraph and |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Money Managers Screen money managers from public funds and ETFs managed around the world |