Correlation Between Income Financial and Cogeco Communications
Can any of the company-specific risk be diversified away by investing in both Income Financial 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 Income Financial and Cogeco Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Income Financial Trust and Cogeco Communications, you can compare the effects of market volatilities on Income Financial 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 Income Financial with a short position of Cogeco Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Income Financial and Cogeco Communications.
Diversification Opportunities for Income Financial and Cogeco Communications
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Income and Cogeco is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Income Financial Trust and Cogeco Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogeco Communications and Income Financial 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 Income Financial Trust 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 Income Financial i.e., Income Financial and Cogeco Communications go up and down completely randomly.
Pair Corralation between Income Financial and Cogeco Communications
Assuming the 90 days trading horizon Income Financial Trust is expected to generate 1.33 times more return on investment than Cogeco Communications. However, Income Financial is 1.33 times more volatile than Cogeco Communications. It trades about 0.04 of its potential returns per unit of risk. Cogeco Communications is currently generating about 0.03 per unit of risk. If you would invest 758.00 in Income Financial Trust on August 29, 2024 and sell it today you would earn a total of 137.00 from holding Income Financial Trust or generate 18.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Income Financial Trust vs. Cogeco Communications
Performance |
| Timeline |
| Income Financial Trust |
| Cogeco Communications |
Income Financial and Cogeco Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Income Financial and Cogeco Communications
The main advantage of trading using opposite Income Financial and Cogeco Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Income Financial 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.| Income Financial vs. Dividend Select 15 | Income Financial vs. Global Dividend Growth | Income Financial vs. Brompton Split Banc | Income Financial vs. Real Estate E Commerce |
| 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 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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