Correlation Between Cogeco Communications and AbbVie
Can any of the company-specific risk be diversified away by investing in both Cogeco Communications and AbbVie 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 Cogeco Communications and AbbVie into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cogeco Communications and AbbVie Inc CDR, you can compare the effects of market volatilities on Cogeco Communications and AbbVie 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 Cogeco Communications with a short position of AbbVie. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cogeco Communications and AbbVie.
Diversification Opportunities for Cogeco Communications and AbbVie
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cogeco and AbbVie is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Cogeco Communications and AbbVie Inc CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AbbVie Inc CDR and Cogeco 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 Cogeco Communications are associated (or correlated) with AbbVie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AbbVie Inc CDR has no effect on the direction of Cogeco Communications i.e., Cogeco Communications and AbbVie go up and down completely randomly.
Pair Corralation between Cogeco Communications and AbbVie
Assuming the 90 days trading horizon Cogeco Communications is expected to generate 1.37 times less return on investment than AbbVie. In addition to that, Cogeco Communications is 1.06 times more volatile than AbbVie Inc CDR. It trades about 0.04 of its total potential returns per unit of risk. AbbVie Inc CDR is currently generating about 0.05 per unit of volatility. If you would invest 2,003 in AbbVie Inc CDR on September 12, 2024 and sell it today you would earn a total of 536.00 from holding AbbVie Inc CDR or generate 26.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cogeco Communications vs. AbbVie Inc CDR
Performance |
| Timeline |
| Cogeco Communications |
| AbbVie Inc CDR |
Cogeco Communications and AbbVie Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cogeco Communications and AbbVie
The main advantage of trading using opposite Cogeco Communications and AbbVie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cogeco Communications position performs unexpectedly, AbbVie 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 AbbVie will offset losses from the drop in AbbVie's long position.| Cogeco Communications vs. Berkshire Hathaway CDR | Cogeco Communications vs. Microsoft Corp CDR | Cogeco Communications vs. Apple Inc CDR | Cogeco Communications vs. Alphabet Inc CDR |
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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