Correlation Between Liberty Global and Cogent Communications
Can any of the company-specific risk be diversified away by investing in both Liberty Global 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 Liberty Global and Cogent Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Liberty Global PLC and Cogent Communications Group, you can compare the effects of market volatilities on Liberty Global 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 Liberty Global with a short position of Cogent Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Global and Cogent Communications.
Diversification Opportunities for Liberty Global and Cogent Communications
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Liberty and Cogent is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Global PLC and Cogent Communications Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogent Communications and Liberty Global 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 Liberty Global PLC 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 Liberty Global i.e., Liberty Global and Cogent Communications go up and down completely randomly.
Pair Corralation between Liberty Global and Cogent Communications
Assuming the 90 days horizon Liberty Global PLC is expected to generate 0.93 times more return on investment than Cogent Communications. However, Liberty Global PLC is 1.07 times less risky than Cogent Communications. It trades about 0.04 of its potential returns per unit of risk. Cogent Communications Group is currently generating about 0.01 per unit of risk. If you would invest 1,001 in Liberty Global PLC on October 20, 2024 and sell it today you would earn a total of 168.00 from holding Liberty Global PLC or generate 16.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Liberty Global PLC vs. Cogent Communications Group
Performance |
| Timeline |
| Liberty Global PLC |
| Cogent Communications |
Liberty Global and Cogent Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liberty Global and Cogent Communications
The main advantage of trading using opposite Liberty Global and Cogent Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Global 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.| Liberty Global vs. Liberty Global PLC | Liberty Global vs. Liberty Latin America | Liberty Global vs. Liberty Latin America | Liberty Global 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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