Correlation Between Cogent Communications and Westgold Resources
Can any of the company-specific risk be diversified away by investing in both Cogent Communications and Westgold Resources 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 Cogent Communications and Westgold Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cogent Communications Holdings and Westgold Resources, you can compare the effects of market volatilities on Cogent Communications and Westgold Resources 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 Cogent Communications with a short position of Westgold Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cogent Communications and Westgold Resources.
Diversification Opportunities for Cogent Communications and Westgold Resources
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cogent and Westgold is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Cogent Communications Holdings and Westgold Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westgold Resources and Cogent Communications 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 Cogent Communications Holdings are associated (or correlated) with Westgold Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westgold Resources has no effect on the direction of Cogent Communications i.e., Cogent Communications and Westgold Resources go up and down completely randomly.
Pair Corralation between Cogent Communications and Westgold Resources
Assuming the 90 days trading horizon Cogent Communications Holdings is expected to generate 0.39 times more return on investment than Westgold Resources. However, Cogent Communications Holdings is 2.58 times less risky than Westgold Resources. It trades about -0.08 of its potential returns per unit of risk. Westgold Resources is currently generating about -0.17 per unit of risk. If you would invest 7,200 in Cogent Communications Holdings on October 11, 2024 and sell it today you would lose (200.00) from holding Cogent Communications Holdings or give up 2.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cogent Communications Holdings vs. Westgold Resources
Performance |
| Timeline |
| Cogent Communications |
| Westgold Resources |
Cogent Communications and Westgold Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cogent Communications and Westgold Resources
The main advantage of trading using opposite Cogent Communications and Westgold Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cogent Communications position performs unexpectedly, Westgold Resources 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 Westgold Resources will offset losses from the drop in Westgold Resources' long position.| Cogent Communications vs. NTT DATA | Cogent Communications vs. TERADATA | Cogent Communications vs. Alliance Data Systems | Cogent Communications vs. MICRONIC MYDATA |
| Westgold Resources vs. ON SEMICONDUCTOR | Westgold Resources vs. Cogent Communications Holdings | Westgold Resources vs. SOCKET MOBILE NEW | Westgold Resources vs. T Mobile |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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