Correlation Between Cogent Communications and Comcast Corp
Can any of the company-specific risk be diversified away by investing in both Cogent Communications and Comcast Corp 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 Cogent Communications and Comcast Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cogent Communications Group and Comcast Corp, you can compare the effects of market volatilities on Cogent Communications and Comcast Corp 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 Cogent Communications with a short position of Comcast Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cogent Communications and Comcast Corp.
Diversification Opportunities for Cogent Communications and Comcast Corp
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cogent and Comcast is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Cogent Communications Group and Comcast Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comcast Corp and Cogent 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 Cogent Communications Group are associated (or correlated) with Comcast Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Comcast Corp has no effect on the direction of Cogent Communications i.e., Cogent Communications and Comcast Corp go up and down completely randomly.
Pair Corralation between Cogent Communications and Comcast Corp
Given the investment horizon of 90 days Cogent Communications is expected to generate 2.47 times less return on investment than Comcast Corp. But when comparing it to its historical volatility, Cogent Communications Group is 1.05 times less risky than Comcast Corp. It trades about 0.05 of its potential returns per unit of risk. Comcast Corp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 4,166 in Comcast Corp on August 26, 2024 and sell it today you would earn a total of 181.00 from holding Comcast Corp or generate 4.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cogent Communications Group vs. Comcast Corp
Performance |
| Timeline |
| Cogent Communications |
| Comcast Corp |
Cogent Communications and Comcast Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cogent Communications and Comcast Corp
The main advantage of trading using opposite Cogent Communications and Comcast Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cogent Communications position performs unexpectedly, Comcast Corp 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 Comcast Corp will offset losses from the drop in Comcast Corp's long position.| Cogent Communications vs. Liberty Broadband Srs | Cogent Communications vs. Ribbon Communications | Cogent Communications vs. Liberty Broadband Srs | Cogent Communications vs. Shenandoah Telecommunications Co |
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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