Correlation Between Cogeco Communications and Pan American
Can any of the company-specific risk be diversified away by investing in both Cogeco Communications and Pan American 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 Pan American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cogeco Communications and Pan American Silver, you can compare the effects of market volatilities on Cogeco Communications and Pan American 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 Pan American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cogeco Communications and Pan American.
Diversification Opportunities for Cogeco Communications and Pan American
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cogeco and Pan is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Cogeco Communications and Pan American Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pan American Silver 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 Pan American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pan American Silver has no effect on the direction of Cogeco Communications i.e., Cogeco Communications and Pan American go up and down completely randomly.
Pair Corralation between Cogeco Communications and Pan American
Assuming the 90 days trading horizon Cogeco Communications is expected to generate 0.54 times more return on investment than Pan American. However, Cogeco Communications is 1.86 times less risky than Pan American. It trades about 0.07 of its potential returns per unit of risk. Pan American Silver is currently generating about -0.09 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. Pan American Silver
Performance |
| Timeline |
| Cogeco Communications |
| Pan American Silver |
Cogeco Communications and Pan American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cogeco Communications and Pan American
The main advantage of trading using opposite Cogeco Communications and Pan American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cogeco Communications position performs unexpectedly, Pan American 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 Pan American will offset losses from the drop in Pan American's long position.| Cogeco Communications vs. Cogeco Inc | Cogeco Communications vs. Quebecor | Cogeco Communications vs. Transcontinental | Cogeco Communications vs. Stella Jones |
| Pan American vs. First Majestic Silver | Pan American vs. Ivanhoe Energy | Pan American vs. Orezone Gold Corp | Pan American vs. Faraday Copper 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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