Correlation Between Cogeco Communications and Tesla
Can any of the company-specific risk be diversified away by investing in both Cogeco Communications and Tesla 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 Tesla into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cogeco Communications and Tesla Inc CDR, you can compare the effects of market volatilities on Cogeco Communications and Tesla 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 Tesla. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cogeco Communications and Tesla.
Diversification Opportunities for Cogeco Communications and Tesla
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cogeco and Tesla is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Cogeco Communications and Tesla Inc CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tesla Inc CDR 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 Tesla. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tesla Inc CDR has no effect on the direction of Cogeco Communications i.e., Cogeco Communications and Tesla go up and down completely randomly.
Pair Corralation between Cogeco Communications and Tesla
Assuming the 90 days trading horizon Cogeco Communications is expected to under-perform the Tesla. But the stock apears to be less risky and, when comparing its historical volatility, Cogeco Communications is 3.14 times less risky than Tesla. The stock trades about -0.11 of its potential returns per unit of risk. The Tesla Inc CDR is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 2,277 in Tesla Inc CDR on November 1, 2024 and sell it today you would earn a total of 1,248 from holding Tesla Inc CDR or generate 54.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cogeco Communications vs. Tesla Inc CDR
Performance |
| Timeline |
| Cogeco Communications |
| Tesla Inc CDR |
Cogeco Communications and Tesla Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cogeco Communications and Tesla
The main advantage of trading using opposite Cogeco Communications and Tesla positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cogeco Communications position performs unexpectedly, Tesla 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 Tesla will offset losses from the drop in Tesla's long position.| Cogeco Communications vs. Cogeco Inc | Cogeco Communications vs. Quebecor | Cogeco Communications vs. Transcontinental | Cogeco Communications vs. Stella Jones |
| Tesla vs. Monument Mining Limited | Tesla vs. Champion Iron | Tesla vs. High Liner Foods | Tesla vs. Maple Leaf Foods |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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