Correlation Between Cogent Communications and Liberty Broadband
Can any of the company-specific risk be diversified away by investing in both Cogent Communications and Liberty Broadband 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 Liberty Broadband 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 Liberty Broadband Corp, you can compare the effects of market volatilities on Cogent Communications and Liberty Broadband 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 Liberty Broadband. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cogent Communications and Liberty Broadband.
Diversification Opportunities for Cogent Communications and Liberty Broadband
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Cogent and Liberty is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Cogent Communications Group and Liberty Broadband Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Broadband 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 Liberty Broadband. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Broadband Corp has no effect on the direction of Cogent Communications i.e., Cogent Communications and Liberty Broadband go up and down completely randomly.
Pair Corralation between Cogent Communications and Liberty Broadband
Given the investment horizon of 90 days Cogent Communications Group is expected to generate 3.9 times more return on investment than Liberty Broadband. However, Cogent Communications is 3.9 times more volatile than Liberty Broadband Corp. It trades about 0.09 of its potential returns per unit of risk. Liberty Broadband Corp is currently generating about 0.09 per unit of risk. If you would invest 8,063 in Cogent Communications Group on August 27, 2024 and sell it today you would earn a total of 239.00 from holding Cogent Communications Group or generate 2.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cogent Communications Group vs. Liberty Broadband Corp
Performance |
| Timeline |
| Cogent Communications |
| Liberty Broadband Corp |
Cogent Communications and Liberty Broadband Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cogent Communications and Liberty Broadband
The main advantage of trading using opposite Cogent Communications and Liberty Broadband positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cogent Communications position performs unexpectedly, Liberty Broadband 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 Liberty Broadband will offset losses from the drop in Liberty Broadband's 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 |
| Liberty Broadband vs. IHS Holding | Liberty Broadband vs. InterDigital | Liberty Broadband vs. Telephone and Data | Liberty Broadband vs. Telephone and Data |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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