Correlation Between InterDigital and Cogent Communications
Can any of the company-specific risk be diversified away by investing in both InterDigital 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 InterDigital and Cogent Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between InterDigital and Cogent Communications Group, you can compare the effects of market volatilities on InterDigital 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 InterDigital with a short position of Cogent Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of InterDigital and Cogent Communications.
Diversification Opportunities for InterDigital and Cogent Communications
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between InterDigital and Cogent is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding InterDigital and Cogent Communications Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogent Communications and InterDigital 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 InterDigital 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 InterDigital i.e., InterDigital and Cogent Communications go up and down completely randomly.
Pair Corralation between InterDigital and Cogent Communications
Given the investment horizon of 90 days InterDigital is expected to generate 0.8 times more return on investment than Cogent Communications. However, InterDigital is 1.25 times less risky than Cogent Communications. It trades about 0.17 of its potential returns per unit of risk. Cogent Communications Group is currently generating about 0.03 per unit of risk. If you would invest 10,727 in InterDigital on August 23, 2024 and sell it today you would earn a total of 7,615 from holding InterDigital or generate 70.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
InterDigital vs. Cogent Communications Group
Performance |
| Timeline |
| InterDigital |
| Cogent Communications |
InterDigital and Cogent Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InterDigital and Cogent Communications
The main advantage of trading using opposite InterDigital and Cogent Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InterDigital 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.| InterDigital vs. KT Corporation | InterDigital vs. Cable One | InterDigital vs. Ooma Inc | InterDigital vs. Liberty Broadband Srs |
| Cogent Communications vs. Liberty Broadband Srs | Cogent Communications vs. Charter Communications | Cogent Communications vs. Liberty Broadband Srs | Cogent Communications vs. TIM Participacoes SA |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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