Correlation Between Cogeco Communications and Labrador Iron
Can any of the company-specific risk be diversified away by investing in both Cogeco Communications and Labrador Iron 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 Labrador Iron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cogeco Communications and Labrador Iron Ore, you can compare the effects of market volatilities on Cogeco Communications and Labrador Iron 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 Labrador Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cogeco Communications and Labrador Iron.
Diversification Opportunities for Cogeco Communications and Labrador Iron
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cogeco and Labrador is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Cogeco Communications and Labrador Iron Ore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Labrador Iron Ore 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 Labrador Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Labrador Iron Ore has no effect on the direction of Cogeco Communications i.e., Cogeco Communications and Labrador Iron go up and down completely randomly.
Pair Corralation between Cogeco Communications and Labrador Iron
Assuming the 90 days trading horizon Cogeco Communications is expected to under-perform the Labrador Iron. In addition to that, Cogeco Communications is 1.37 times more volatile than Labrador Iron Ore. It trades about -0.11 of its total potential returns per unit of risk. Labrador Iron Ore is currently generating about 0.01 per unit of volatility. If you would invest 3,056 in Labrador Iron Ore on November 2, 2024 and sell it today you would earn a total of 13.00 from holding Labrador Iron Ore or generate 0.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cogeco Communications vs. Labrador Iron Ore
Performance |
| Timeline |
| Cogeco Communications |
| Labrador Iron Ore |
Cogeco Communications and Labrador Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cogeco Communications and Labrador Iron
The main advantage of trading using opposite Cogeco Communications and Labrador Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cogeco Communications position performs unexpectedly, Labrador Iron 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 Labrador Iron will offset losses from the drop in Labrador Iron's long position.| Cogeco Communications vs. Cogeco Inc | Cogeco Communications vs. Quebecor | Cogeco Communications vs. Transcontinental | Cogeco Communications vs. Stella Jones |
| Labrador Iron vs. Keyera Corp | Labrador Iron vs. Russel Metals | Labrador Iron vs. Freehold Royalties | Labrador Iron vs. Capital Power |
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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