Correlation Between Cogeco Communications and Nutrien
Can any of the company-specific risk be diversified away by investing in both Cogeco Communications and Nutrien 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 Nutrien into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cogeco Communications and Nutrien, you can compare the effects of market volatilities on Cogeco Communications and Nutrien 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 Nutrien. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cogeco Communications and Nutrien.
Diversification Opportunities for Cogeco Communications and Nutrien
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cogeco and Nutrien is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Cogeco Communications and Nutrien in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nutrien 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 Nutrien. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nutrien has no effect on the direction of Cogeco Communications i.e., Cogeco Communications and Nutrien go up and down completely randomly.
Pair Corralation between Cogeco Communications and Nutrien
Assuming the 90 days trading horizon Cogeco Communications is expected to generate 0.97 times more return on investment than Nutrien. However, Cogeco Communications is 1.03 times less risky than Nutrien. It trades about 0.07 of its potential returns per unit of risk. Nutrien is currently generating about -0.16 per unit of risk. If you would invest 6,903 in Cogeco Communications on September 4, 2024 and sell it today you would earn a total of 127.00 from holding Cogeco Communications or generate 1.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cogeco Communications vs. Nutrien
Performance |
| Timeline |
| Cogeco Communications |
| Nutrien |
Cogeco Communications and Nutrien Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cogeco Communications and Nutrien
The main advantage of trading using opposite Cogeco Communications and Nutrien positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cogeco Communications position performs unexpectedly, Nutrien 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 Nutrien will offset losses from the drop in Nutrien's long position.| Cogeco Communications vs. Cogeco Inc | Cogeco Communications vs. Quebecor | Cogeco Communications vs. Transcontinental | Cogeco Communications vs. Stella Jones |
| Nutrien vs. Queens Road Capital | Nutrien vs. Perseus Mining | Nutrien vs. Dream Office Real | Nutrien vs. Quipt Home Medical |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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