Correlation Between National Bank and Cogent Communications
Can any of the company-specific risk be diversified away by investing in both National Bank 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 National Bank and Cogent Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Bank Holdings and Cogent Communications Holdings, you can compare the effects of market volatilities on National Bank 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 National Bank with a short position of Cogent Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and Cogent Communications.
Diversification Opportunities for National Bank and Cogent Communications
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between National and Cogent is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding National Bank Holdings and Cogent Communications Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogent Communications and National Bank 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 National Bank Holdings 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 National Bank i.e., National Bank and Cogent Communications go up and down completely randomly.
Pair Corralation between National Bank and Cogent Communications
Assuming the 90 days horizon National Bank is expected to generate 2.14 times less return on investment than Cogent Communications. In addition to that, National Bank is 1.04 times more volatile than Cogent Communications Holdings. It trades about 0.03 of its total potential returns per unit of risk. Cogent Communications Holdings is currently generating about 0.06 per unit of volatility. If you would invest 4,631 in Cogent Communications Holdings on September 2, 2024 and sell it today you would earn a total of 3,069 from holding Cogent Communications Holdings or generate 66.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Bank Holdings vs. Cogent Communications Holdings
Performance |
| Timeline |
| National Bank Holdings |
| Cogent Communications |
National Bank and Cogent Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Bank and Cogent Communications
The main advantage of trading using opposite National Bank and Cogent Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bank 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.| National Bank vs. Eagle Materials | National Bank vs. Plastic Omnium | National Bank vs. SANOK RUBBER ZY | National Bank vs. Mitsubishi Materials |
| Cogent Communications vs. Calibre Mining Corp | Cogent Communications vs. FUYO GENERAL LEASE | Cogent Communications vs. MINCO SILVER | Cogent Communications vs. Apollo Investment Corp |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins |