Correlation Between Cogeco Communications and Western Investment
Can any of the company-specific risk be diversified away by investing in both Cogeco Communications and Western Investment 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 Western Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cogeco Communications and Western Investment, you can compare the effects of market volatilities on Cogeco Communications and Western Investment 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 Western Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cogeco Communications and Western Investment.
Diversification Opportunities for Cogeco Communications and Western Investment
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cogeco and Western is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Cogeco Communications and Western Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Investment 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 Western Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Investment has no effect on the direction of Cogeco Communications i.e., Cogeco Communications and Western Investment go up and down completely randomly.
Pair Corralation between Cogeco Communications and Western Investment
Assuming the 90 days trading horizon Cogeco Communications is expected to generate 28.37 times less return on investment than Western Investment. But when comparing it to its historical volatility, Cogeco Communications is 2.45 times less risky than Western Investment. It trades about 0.0 of its potential returns per unit of risk. Western Investment is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 37.00 in Western Investment on September 20, 2024 and sell it today you would earn a total of 12.00 from holding Western Investment or generate 32.43% 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. Western Investment
Performance |
| Timeline |
| Cogeco Communications |
| Western Investment |
Cogeco Communications and Western Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cogeco Communications and Western Investment
The main advantage of trading using opposite Cogeco Communications and Western Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cogeco Communications position performs unexpectedly, Western Investment 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 Western Investment will offset losses from the drop in Western Investment's long position.| Cogeco Communications vs. UPS CDR | Cogeco Communications vs. HOME DEPOT CDR | Cogeco Communications vs. UnitedHealth Group CDR | Cogeco Communications vs. Costco Wholesale Corp |
| Western Investment vs. NeXGold Mining Corp | Western Investment vs. Marimaca Copper Corp | Western Investment vs. Computer Modelling Group | Western Investment vs. Cogeco Communications |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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