Correlation Between GameStop Corp and Cogent Communications
Can any of the company-specific risk be diversified away by investing in both GameStop Corp and Cogent 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 GameStop Corp and Cogent Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GameStop Corp and Cogent Communications Holdings, you can compare the effects of market volatilities on GameStop Corp and Cogent 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 GameStop Corp with a short position of Cogent Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of GameStop Corp and Cogent Communications.
Diversification Opportunities for GameStop Corp and Cogent Communications
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GameStop and Cogent is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding GameStop Corp and Cogent Communications Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogent Communications and GameStop Corp 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 GameStop Corp are associated (or correlated) with Cogent Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cogent Communications has no effect on the direction of GameStop Corp i.e., GameStop Corp and Cogent Communications go up and down completely randomly.
Pair Corralation between GameStop Corp and Cogent Communications
Assuming the 90 days trading horizon GameStop Corp is expected to generate 1.79 times more return on investment than Cogent Communications. However, GameStop Corp is 1.79 times more volatile than Cogent Communications Holdings. It trades about 0.18 of its potential returns per unit of risk. Cogent Communications Holdings is currently generating about 0.13 per unit of risk. If you would invest 1,828 in GameStop Corp on September 12, 2024 and sell it today you would earn a total of 864.00 from holding GameStop Corp or generate 47.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GameStop Corp vs. Cogent Communications Holdings
Performance |
| Timeline |
| GameStop Corp |
| Cogent Communications |
GameStop Corp and Cogent Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GameStop Corp and Cogent Communications
The main advantage of trading using opposite GameStop Corp and Cogent Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GameStop Corp position performs unexpectedly, Cogent 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 Cogent Communications will offset losses from the drop in Cogent Communications' long position.| GameStop Corp vs. Superior Plus Corp | GameStop Corp vs. SIVERS SEMICONDUCTORS AB | GameStop Corp vs. NorAm Drilling AS | GameStop Corp vs. Norsk Hydro ASA |
| Cogent Communications vs. Superior Plus Corp | Cogent Communications vs. SIVERS SEMICONDUCTORS AB | Cogent Communications vs. Norsk Hydro ASA | Cogent Communications vs. Reliance Steel Aluminum |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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