Correlation Between Cogeco Communications and Laurentian Bank
Can any of the company-specific risk be diversified away by investing in both Cogeco Communications and Laurentian Bank 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 Laurentian Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cogeco Communications and Laurentian Bank, you can compare the effects of market volatilities on Cogeco Communications and Laurentian Bank 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 Laurentian Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cogeco Communications and Laurentian Bank.
Diversification Opportunities for Cogeco Communications and Laurentian Bank
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cogeco and Laurentian is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Cogeco Communications and Laurentian Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laurentian Bank 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 Laurentian Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laurentian Bank has no effect on the direction of Cogeco Communications i.e., Cogeco Communications and Laurentian Bank go up and down completely randomly.
Pair Corralation between Cogeco Communications and Laurentian Bank
Assuming the 90 days trading horizon Cogeco Communications is expected to under-perform the Laurentian Bank. But the stock apears to be less risky and, when comparing its historical volatility, Cogeco Communications is 1.3 times less risky than Laurentian Bank. The stock trades about -0.07 of its potential returns per unit of risk. The Laurentian Bank is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest 2,658 in Laurentian Bank on August 28, 2024 and sell it today you would earn a total of 271.00 from holding Laurentian Bank or generate 10.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cogeco Communications vs. Laurentian Bank
Performance |
| Timeline |
| Cogeco Communications |
| Laurentian Bank |
Cogeco Communications and Laurentian Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cogeco Communications and Laurentian Bank
The main advantage of trading using opposite Cogeco Communications and Laurentian Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cogeco Communications position performs unexpectedly, Laurentian Bank 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 Laurentian Bank will offset losses from the drop in Laurentian Bank's long position.| Cogeco Communications vs. Alphabet Inc CDR | Cogeco Communications vs. Microsoft Corp CDR | Cogeco Communications vs. NVIDIA CDR | Cogeco Communications vs. Tesla Inc CDR |
| Laurentian Bank vs. Canadian Western Bank | Laurentian Bank vs. National Bank of | Laurentian Bank vs. Canadian Imperial Bank | Laurentian Bank vs. Great West Lifeco |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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