Correlation Between International Consolidated and Cogent Communications
Can any of the company-specific risk be diversified away by investing in both International Consolidated 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 International Consolidated and Cogent Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Consolidated Airlines and Cogent Communications Holdings, you can compare the effects of market volatilities on International Consolidated 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 International Consolidated with a short position of Cogent Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Consolidated and Cogent Communications.
Diversification Opportunities for International Consolidated and Cogent Communications
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between International and Cogent is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding International Consolidated Air and Cogent Communications Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogent Communications and International Consolidated 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 International Consolidated Airlines 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 International Consolidated i.e., International Consolidated and Cogent Communications go up and down completely randomly.
Pair Corralation between International Consolidated and Cogent Communications
Assuming the 90 days horizon International Consolidated Airlines is expected to generate 0.9 times more return on investment than Cogent Communications. However, International Consolidated Airlines is 1.12 times less risky than Cogent Communications. It trades about 0.08 of its potential returns per unit of risk. Cogent Communications Holdings is currently generating about 0.05 per unit of risk. If you would invest 153.00 in International Consolidated Airlines on August 28, 2024 and sell it today you would earn a total of 141.00 from holding International Consolidated Airlines or generate 92.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Consolidated Air vs. Cogent Communications Holdings
Performance |
| Timeline |
| International Consolidated |
| Cogent Communications |
International Consolidated and Cogent Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Consolidated and Cogent Communications
The main advantage of trading using opposite International Consolidated and Cogent Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Consolidated 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.| International Consolidated vs. 24SEVENOFFICE GROUP AB | International Consolidated vs. SLR Investment Corp | International Consolidated vs. The City of | International Consolidated vs. American Airlines Group |
| Cogent Communications vs. T Mobile | Cogent Communications vs. ATT Inc | Cogent Communications vs. Deutsche Telekom AG |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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