Correlation Between Cogeco Communications and Xtract One
Can any of the company-specific risk be diversified away by investing in both Cogeco Communications and Xtract One 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 Xtract One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cogeco Communications and Xtract One Technologies, you can compare the effects of market volatilities on Cogeco Communications and Xtract One 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 Xtract One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cogeco Communications and Xtract One.
Diversification Opportunities for Cogeco Communications and Xtract One
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Cogeco and Xtract is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Cogeco Communications and Xtract One Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtract One Technologies 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 Xtract One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtract One Technologies has no effect on the direction of Cogeco Communications i.e., Cogeco Communications and Xtract One go up and down completely randomly.
Pair Corralation between Cogeco Communications and Xtract One
Assuming the 90 days trading horizon Cogeco Communications is expected to generate 3.05 times less return on investment than Xtract One. But when comparing it to its historical volatility, Cogeco Communications is 2.41 times less risky than Xtract One. It trades about 0.02 of its potential returns per unit of risk. Xtract One Technologies is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 51.00 in Xtract One Technologies on September 12, 2024 and sell it today you would earn a total of 3.00 from holding Xtract One Technologies or generate 5.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cogeco Communications vs. Xtract One Technologies
Performance |
| Timeline |
| Cogeco Communications |
| Xtract One Technologies |
Cogeco Communications and Xtract One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cogeco Communications and Xtract One
The main advantage of trading using opposite Cogeco Communications and Xtract One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cogeco Communications position performs unexpectedly, Xtract One 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 Xtract One will offset losses from the drop in Xtract One's long position.| Cogeco Communications vs. Berkshire Hathaway CDR | Cogeco Communications vs. Microsoft Corp CDR | Cogeco Communications vs. Apple Inc CDR | Cogeco Communications vs. Alphabet Inc CDR |
| Xtract One vs. Apple Inc CDR | Xtract One vs. NVIDIA CDR | Xtract One vs. Microsoft Corp CDR | Xtract One vs. Amazon CDR |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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