Correlation Between Charter Communications and Cogent Communications
Can any of the company-specific risk be diversified away by investing in both Charter Communications and Cogent 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 Charter Communications and Cogent Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Charter Communications and Cogent Communications Group, you can compare the effects of market volatilities on Charter Communications and Cogent 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 Charter Communications with a short position of Cogent Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Communications and Cogent Communications.
Diversification Opportunities for Charter Communications and Cogent Communications
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Charter and Cogent is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications and Cogent Communications Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogent Communications and Charter 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 Charter Communications are associated (or correlated) with Cogent Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cogent Communications has no effect on the direction of Charter Communications i.e., Charter Communications and Cogent Communications go up and down completely randomly.
Pair Corralation between Charter Communications and Cogent Communications
Given the investment horizon of 90 days Charter Communications is expected to generate 1.3 times less return on investment than Cogent Communications. In addition to that, Charter Communications is 1.44 times more volatile than Cogent Communications Group. It trades about 0.07 of its total potential returns per unit of risk. Cogent Communications Group is currently generating about 0.14 per unit of volatility. If you would invest 7,293 in Cogent Communications Group on August 23, 2024 and sell it today you would earn a total of 1,086 from holding Cogent Communications Group or generate 14.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Charter Communications vs. Cogent Communications Group
Performance |
| Timeline |
| Charter Communications |
| Cogent Communications |
Charter Communications and Cogent Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charter Communications and Cogent Communications
The main advantage of trading using opposite Charter Communications and Cogent Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charter Communications position performs unexpectedly, Cogent 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 Cogent Communications will offset losses from the drop in Cogent Communications' long position.| Charter Communications vs. T Mobile | Charter Communications vs. Verizon Communications | Charter Communications vs. ATT Inc | Charter Communications vs. Liberty Broadband Srs |
| 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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