Correlation Between Cogent Communications and Verizon Communications
Can any of the company-specific risk be diversified away by investing in both Cogent Communications and Verizon Communications 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 Verizon Communications 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 Verizon Communications, you can compare the effects of market volatilities on Cogent Communications and Verizon Communications 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 Verizon Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cogent Communications and Verizon Communications.
Diversification Opportunities for Cogent Communications and Verizon Communications
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cogent and Verizon is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Cogent Communications Group and Verizon Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verizon Communications 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 Verizon Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verizon Communications has no effect on the direction of Cogent Communications i.e., Cogent Communications and Verizon Communications go up and down completely randomly.
Pair Corralation between Cogent Communications and Verizon Communications
Given the investment horizon of 90 days Cogent Communications is expected to generate 2.27 times less return on investment than Verizon Communications. In addition to that, Cogent Communications is 1.55 times more volatile than Verizon Communications. It trades about 0.04 of its total potential returns per unit of risk. Verizon Communications is currently generating about 0.13 per unit of volatility. If you would invest 4,186 in Verizon Communications on August 25, 2024 and sell it today you would earn a total of 129.00 from holding Verizon Communications or generate 3.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cogent Communications Group vs. Verizon Communications
Performance |
| Timeline |
| Cogent Communications |
| Verizon Communications |
Cogent Communications and Verizon Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cogent Communications and Verizon Communications
The main advantage of trading using opposite Cogent Communications and Verizon Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cogent Communications position performs unexpectedly, Verizon Communications 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 Verizon Communications will offset losses from the drop in Verizon Communications' 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 |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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