Correlation Between Royal Canadian and Cogeco Communications
Can any of the company-specific risk be diversified away by investing in both Royal Canadian 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 Royal Canadian and Cogeco Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Royal Canadian Mint and Cogeco Communications, you can compare the effects of market volatilities on Royal Canadian 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 Royal Canadian with a short position of Cogeco Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royal Canadian and Cogeco Communications.
Diversification Opportunities for Royal Canadian and Cogeco Communications
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Royal and Cogeco is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Royal Canadian Mint and Cogeco Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogeco Communications and Royal Canadian 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 Royal Canadian Mint 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 Royal Canadian i.e., Royal Canadian and Cogeco Communications go up and down completely randomly.
Pair Corralation between Royal Canadian and Cogeco Communications
Assuming the 90 days trading horizon Royal Canadian Mint is expected to generate 0.5 times more return on investment than Cogeco Communications. However, Royal Canadian Mint is 2.0 times less risky than Cogeco Communications. It trades about 0.19 of its potential returns per unit of risk. Cogeco Communications is currently generating about -0.03 per unit of risk. If you would invest 3,803 in Royal Canadian Mint on September 27, 2024 and sell it today you would earn a total of 139.00 from holding Royal Canadian Mint or generate 3.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Royal Canadian Mint vs. Cogeco Communications
Performance |
| Timeline |
| Royal Canadian Mint |
| Cogeco Communications |
Royal Canadian and Cogeco Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Royal Canadian and Cogeco Communications
The main advantage of trading using opposite Royal Canadian and Cogeco Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royal Canadian 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.| Royal Canadian vs. iFabric Corp | Royal Canadian vs. Canlan Ice Sports | Royal Canadian vs. Firan Technology Group | Royal Canadian vs. TWC Enterprises |
| 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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