Correlation Between Cogent Communications and Telephone
Can any of the company-specific risk be diversified away by investing in both Cogent Communications and Telephone 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 Telephone 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 Telephone and Data, you can compare the effects of market volatilities on Cogent Communications and Telephone 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 Telephone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cogent Communications and Telephone.
Diversification Opportunities for Cogent Communications and Telephone
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Cogent and Telephone is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Cogent Communications Group and Telephone and Data in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telephone and Data 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 Telephone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telephone and Data has no effect on the direction of Cogent Communications i.e., Cogent Communications and Telephone go up and down completely randomly.
Pair Corralation between Cogent Communications and Telephone
Given the investment horizon of 90 days Cogent Communications Group is expected to generate 1.16 times more return on investment than Telephone. However, Cogent Communications is 1.16 times more volatile than Telephone and Data. It trades about 0.48 of its potential returns per unit of risk. Telephone and Data is currently generating about 0.41 per unit of risk. If you would invest 7,357 in Cogent Communications Group on November 21, 2024 and sell it today you would earn a total of 983.00 from holding Cogent Communications Group or generate 13.36% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Cogent Communications Group vs. Telephone and Data
Performance |
Timeline |
Cogent Communications |
Telephone and Data |
Cogent Communications and Telephone Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Cogent Communications and Telephone
The main advantage of trading using opposite Cogent Communications and Telephone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cogent Communications position performs unexpectedly, Telephone 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 Telephone will offset losses from the drop in Telephone's long position.Cogent Communications vs. Liberty Broadband Srs | ||
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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