Correlation Between Fortis Pref and Cogeco Communications
Can any of the company-specific risk be diversified away by investing in both Fortis Pref 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 Fortis Pref and Cogeco Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortis Pref M and Cogeco Communications, you can compare the effects of market volatilities on Fortis Pref 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 Fortis Pref with a short position of Cogeco Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortis Pref and Cogeco Communications.
Diversification Opportunities for Fortis Pref and Cogeco Communications
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Fortis and Cogeco is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Fortis Pref M and Cogeco Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogeco Communications and Fortis Pref 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 Fortis Pref M 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 Fortis Pref i.e., Fortis Pref and Cogeco Communications go up and down completely randomly.
Pair Corralation between Fortis Pref and Cogeco Communications
Assuming the 90 days trading horizon Fortis Pref is expected to generate 1.29 times less return on investment than Cogeco Communications. But when comparing it to its historical volatility, Fortis Pref M is 1.89 times less risky than Cogeco Communications. It trades about 0.13 of its potential returns per unit of risk. Cogeco Communications is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 5,274 in Cogeco Communications on September 14, 2024 and sell it today you would earn a total of 1,784 from holding Cogeco Communications or generate 33.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fortis Pref M vs. Cogeco Communications
Performance |
| Timeline |
| Fortis Pref M |
| Cogeco Communications |
Fortis Pref and Cogeco Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortis Pref and Cogeco Communications
The main advantage of trading using opposite Fortis Pref and Cogeco Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortis Pref 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.| Fortis Pref vs. Microsoft Corp CDR | Fortis Pref vs. Apple Inc CDR | Fortis Pref vs. Alphabet Inc CDR | Fortis Pref 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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