Correlation Between NYSE Composite and Cogent Communications
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and Cogent Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Cogent Communications Group, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of Cogent Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Cogent Communications.
Diversification Opportunities for NYSE Composite and Cogent Communications
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and Cogent is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Cogent Communications Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogent Communications and NYSE Composite 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 NYSE Composite 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 NYSE Composite i.e., NYSE Composite and Cogent Communications go up and down completely randomly.
Pair Corralation between NYSE Composite and Cogent Communications
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.31 times more return on investment than Cogent Communications. However, NYSE Composite is 3.21 times less risky than Cogent Communications. It trades about 0.11 of its potential returns per unit of risk. Cogent Communications Group is currently generating about 0.03 per unit of risk. If you would invest 1,760,743 in NYSE Composite on August 27, 2024 and sell it today you would earn a total of 251,602 from holding NYSE Composite or generate 14.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Cogent Communications Group
Performance |
| Timeline |
NYSE Composite and Cogent Communications Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Cogent Communications Group
Pair trading matchups for Cogent Communications
Pair Trading with NYSE Composite and Cogent Communications
The main advantage of trading using opposite NYSE Composite and Cogent Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Grocery Outlet Holding | NYSE Composite vs. Tencent Music Entertainment | NYSE Composite vs. SunLink Health Systems | NYSE Composite vs. Getty Realty |
| Cogent Communications vs. Liberty Broadband Srs | Cogent Communications vs. Ribbon Communications | Cogent Communications vs. Liberty Broadband Srs | Cogent Communications vs. Shenandoah Telecommunications Co |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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