Correlation Between Findev and Cogeco Communications
Can any of the company-specific risk be diversified away by investing in both Findev 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 Findev and Cogeco Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Findev Inc and Cogeco Communications, you can compare the effects of market volatilities on Findev 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 Findev with a short position of Cogeco Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Findev and Cogeco Communications.
Diversification Opportunities for Findev and Cogeco Communications
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Findev and Cogeco is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Findev Inc and Cogeco Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogeco Communications and Findev 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 Findev Inc 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 Findev i.e., Findev and Cogeco Communications go up and down completely randomly.
Pair Corralation between Findev and Cogeco Communications
Assuming the 90 days horizon Findev Inc is expected to generate 2.82 times more return on investment than Cogeco Communications. However, Findev is 2.82 times more volatile than Cogeco Communications. It trades about 0.3 of its potential returns per unit of risk. Cogeco Communications is currently generating about -0.09 per unit of risk. If you would invest 40.00 in Findev Inc on August 30, 2024 and sell it today you would earn a total of 7.00 from holding Findev Inc or generate 17.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Findev Inc vs. Cogeco Communications
Performance |
| Timeline |
| Findev Inc |
| Cogeco Communications |
Findev and Cogeco Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Findev and Cogeco Communications
The main advantage of trading using opposite Findev and Cogeco Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Findev 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.| Findev vs. Microsoft Corp CDR | Findev vs. Apple Inc CDR | Findev vs. Alphabet Inc CDR | Findev vs. Amazon CDR |
| Cogeco Communications vs. Cogeco Inc | Cogeco Communications vs. Quebecor | Cogeco Communications vs. Transcontinental | Cogeco Communications vs. Stella Jones |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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