Correlation Between Cogeco and Uniteds
Can any of the company-specific risk be diversified away by investing in both Cogeco and Uniteds 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 Cogeco and Uniteds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cogeco Inc and Uniteds Limited, you can compare the effects of market volatilities on Cogeco and Uniteds 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 Cogeco with a short position of Uniteds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cogeco and Uniteds.
Diversification Opportunities for Cogeco and Uniteds
Excellent diversification
The 3 months correlation between Cogeco and Uniteds is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Cogeco Inc and Uniteds Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uniteds Limited and Cogeco 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 Cogeco Inc are associated (or correlated) with Uniteds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uniteds Limited has no effect on the direction of Cogeco i.e., Cogeco and Uniteds go up and down completely randomly.
Pair Corralation between Cogeco and Uniteds
Assuming the 90 days trading horizon Cogeco is expected to generate 6.28 times less return on investment than Uniteds. In addition to that, Cogeco is 1.58 times more volatile than Uniteds Limited. It trades about 0.01 of its total potential returns per unit of risk. Uniteds Limited is currently generating about 0.09 per unit of volatility. If you would invest 9,983 in Uniteds Limited on November 9, 2024 and sell it today you would earn a total of 4,163 from holding Uniteds Limited or generate 41.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 81.54% |
| Values | Daily Returns |
Cogeco Inc vs. Uniteds Limited
Performance |
| Timeline |
| Cogeco Inc |
| Uniteds Limited |
Cogeco and Uniteds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cogeco and Uniteds
The main advantage of trading using opposite Cogeco and Uniteds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cogeco position performs unexpectedly, Uniteds 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 Uniteds will offset losses from the drop in Uniteds' long position.| Cogeco vs. Cogeco Communications | Cogeco vs. Quebecor | Cogeco vs. Transcontinental | Cogeco vs. Stella Jones |
| Uniteds vs. Economic Investment Trust | Uniteds vs. Canadian General Investments | Uniteds vs. E L Financial Corp | Uniteds vs. Clairvest Group |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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