Correlation Between Enablence Technologies and Cogeco Communications
Can any of the company-specific risk be diversified away by investing in both Enablence Technologies 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 Enablence Technologies and Cogeco Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enablence Technologies and Cogeco Communications, you can compare the effects of market volatilities on Enablence Technologies 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 Enablence Technologies with a short position of Cogeco Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enablence Technologies and Cogeco Communications.
Diversification Opportunities for Enablence Technologies and Cogeco Communications
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Enablence and Cogeco is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Enablence Technologies and Cogeco Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogeco Communications and Enablence Technologies 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 Enablence Technologies 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 Enablence Technologies i.e., Enablence Technologies and Cogeco Communications go up and down completely randomly.
Pair Corralation between Enablence Technologies and Cogeco Communications
Assuming the 90 days horizon Enablence Technologies is expected to generate 5.62 times more return on investment than Cogeco Communications. However, Enablence Technologies is 5.62 times more volatile than Cogeco Communications. It trades about 0.06 of its potential returns per unit of risk. Cogeco Communications is currently generating about 0.0 per unit of risk. If you would invest 100.00 in Enablence Technologies on November 2, 2024 and sell it today you would earn a total of 95.00 from holding Enablence Technologies or generate 95.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Enablence Technologies vs. Cogeco Communications
Performance |
| Timeline |
| Enablence Technologies |
| Cogeco Communications |
Enablence Technologies and Cogeco Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enablence Technologies and Cogeco Communications
The main advantage of trading using opposite Enablence Technologies and Cogeco Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enablence Technologies 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.The idea behind Enablence Technologies and Cogeco Communications pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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