Correlation Between Forstrong Global and Cogeco Communications
Can any of the company-specific risk be diversified away by investing in both Forstrong Global 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 Forstrong Global and Cogeco Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Forstrong Global Income and Cogeco Communications, you can compare the effects of market volatilities on Forstrong Global 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 Forstrong Global with a short position of Cogeco Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Forstrong Global and Cogeco Communications.
Diversification Opportunities for Forstrong Global and Cogeco Communications
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Forstrong and Cogeco is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Forstrong Global Income and Cogeco Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogeco Communications and Forstrong Global 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 Forstrong Global Income 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 Forstrong Global i.e., Forstrong Global and Cogeco Communications go up and down completely randomly.
Pair Corralation between Forstrong Global and Cogeco Communications
Assuming the 90 days trading horizon Forstrong Global Income is expected to generate 0.4 times more return on investment than Cogeco Communications. However, Forstrong Global Income is 2.52 times less risky than Cogeco Communications. It trades about -0.08 of its potential returns per unit of risk. Cogeco Communications is currently generating about -0.14 per unit of risk. If you would invest 2,175 in Forstrong Global Income on August 31, 2024 and sell it today you would lose (13.00) from holding Forstrong Global Income or give up 0.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Forstrong Global Income vs. Cogeco Communications
Performance |
| Timeline |
| Forstrong Global Income |
| Cogeco Communications |
Forstrong Global and Cogeco Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Forstrong Global and Cogeco Communications
The main advantage of trading using opposite Forstrong Global and Cogeco Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Forstrong Global 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.| Forstrong Global vs. Forstrong Global Ex North | Forstrong Global vs. Forstrong Global Growth | Forstrong Global vs. Forstrong Emerging Markets | Forstrong Global vs. NBI High Yield |
| Cogeco Communications vs. Cielo Waste Solutions | Cogeco Communications vs. Eros Resources Corp | Cogeco Communications vs. Forstrong Global Income | Cogeco Communications vs. iShares Canadian HYBrid |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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