Correlation Between Cogeco Communications and American Lithium
Can any of the company-specific risk be diversified away by investing in both Cogeco Communications and American Lithium 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 American Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cogeco Communications and American Lithium Corp, you can compare the effects of market volatilities on Cogeco Communications and American Lithium 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 American Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cogeco Communications and American Lithium.
Diversification Opportunities for Cogeco Communications and American Lithium
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cogeco and American is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Cogeco Communications and American Lithium Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Lithium Corp 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 American Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Lithium Corp has no effect on the direction of Cogeco Communications i.e., Cogeco Communications and American Lithium go up and down completely randomly.
Pair Corralation between Cogeco Communications and American Lithium
Assuming the 90 days trading horizon Cogeco Communications is expected to generate 0.25 times more return on investment than American Lithium. However, Cogeco Communications is 4.03 times less risky than American Lithium. It trades about 0.02 of its potential returns per unit of risk. American Lithium Corp is currently generating about -0.02 per unit of risk. If you would invest 5,888 in Cogeco Communications on November 3, 2024 and sell it today you would earn a total of 227.00 from holding Cogeco Communications or generate 3.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Cogeco Communications vs. American Lithium Corp
Performance |
| Timeline |
| Cogeco Communications |
| American Lithium Corp |
Cogeco Communications and American Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cogeco Communications and American Lithium
The main advantage of trading using opposite Cogeco Communications and American Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cogeco Communications position performs unexpectedly, American Lithium 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 American Lithium will offset losses from the drop in American Lithium's long position.| Cogeco Communications vs. Cogeco Inc | Cogeco Communications vs. Quebecor | Cogeco Communications vs. Transcontinental | Cogeco Communications vs. Stella Jones |
| American Lithium vs. Toronto Dominion Bank | American Lithium vs. Canso Credit Trust | American Lithium vs. Pollard Banknote Limited | American Lithium vs. Giga Metals Corp |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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