Correlation Between Caribbean Utilities and Cogeco Communications
Can any of the company-specific risk be diversified away by investing in both Caribbean Utilities and Cogeco 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 Caribbean Utilities and Cogeco Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caribbean Utilities and Cogeco Communications, you can compare the effects of market volatilities on Caribbean Utilities and Cogeco 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 Caribbean Utilities with a short position of Cogeco Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caribbean Utilities and Cogeco Communications.
Diversification Opportunities for Caribbean Utilities and Cogeco Communications
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Caribbean and Cogeco is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Caribbean Utilities and Cogeco Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogeco Communications and Caribbean Utilities 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 Caribbean Utilities are associated (or correlated) with Cogeco Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cogeco Communications has no effect on the direction of Caribbean Utilities i.e., Caribbean Utilities and Cogeco Communications go up and down completely randomly.
Pair Corralation between Caribbean Utilities and Cogeco Communications
Assuming the 90 days trading horizon Caribbean Utilities is expected to generate 0.66 times more return on investment than Cogeco Communications. However, Caribbean Utilities is 1.51 times less risky than Cogeco Communications. It trades about 0.16 of its potential returns per unit of risk. Cogeco Communications is currently generating about 0.05 per unit of risk. If you would invest 1,351 in Caribbean Utilities on September 12, 2024 and sell it today you would earn a total of 50.00 from holding Caribbean Utilities or generate 3.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caribbean Utilities vs. Cogeco Communications
Performance |
| Timeline |
| Caribbean Utilities |
| Cogeco Communications |
Caribbean Utilities and Cogeco Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caribbean Utilities and Cogeco Communications
The main advantage of trading using opposite Caribbean Utilities and Cogeco Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caribbean Utilities position performs unexpectedly, Cogeco 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 Cogeco Communications will offset losses from the drop in Cogeco Communications' long position.| Caribbean Utilities vs. Maxim Power Corp | Caribbean Utilities vs. ATCO | Caribbean Utilities vs. Richards Packaging Income | Caribbean Utilities vs. iShares Canadian HYBrid |
| Cogeco Communications vs. Berkshire Hathaway CDR | Cogeco Communications vs. Microsoft Corp CDR | Cogeco Communications vs. Apple Inc CDR | Cogeco Communications vs. Alphabet Inc CDR |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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