Correlation Between Cogent Communications and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Cogent Communications and Dow Jones 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 Dow Jones 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 Dow Jones Industrial, you can compare the effects of market volatilities on Cogent Communications and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cogent Communications and Dow Jones.
Diversification Opportunities for Cogent Communications and Dow Jones
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Cogent and Dow is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Cogent Communications Group and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Cogent Communications i.e., Cogent Communications and Dow Jones go up and down completely randomly.
Pair Corralation between Cogent Communications and Dow Jones
Given the investment horizon of 90 days Cogent Communications Group is expected to under-perform the Dow Jones. In addition to that, Cogent Communications is 2.25 times more volatile than Dow Jones Industrial. It trades about -0.08 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.17 per unit of volatility. If you would invest 4,234,224 in Dow Jones Industrial on October 20, 2024 and sell it today you would earn a total of 114,559 from holding Dow Jones Industrial or generate 2.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Cogent Communications Group vs. Dow Jones Industrial
Performance |
| Timeline |
Cogent Communications and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Cogent Communications Group
Pair trading matchups for Cogent Communications
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Cogent Communications and Dow Jones
The main advantage of trading using opposite Cogent Communications and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cogent Communications position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Cogent Communications vs. Liberty Broadband Srs | Cogent Communications vs. Charter Communications | Cogent Communications vs. Liberty Broadband Srs | Cogent Communications vs. TIM Participacoes SA |
| Dow Jones vs. SkyWest | Dow Jones vs. Air Transport Services | Dow Jones vs. LATAM Airlines Group | Dow Jones vs. Emerson Radio |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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