Correlation Between Cogent Communications and New Residential
Can any of the company-specific risk be diversified away by investing in both Cogent Communications and New Residential 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 New Residential 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 New Residential Investment, you can compare the effects of market volatilities on Cogent Communications and New Residential 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 New Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cogent Communications and New Residential.
Diversification Opportunities for Cogent Communications and New Residential
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Cogent and New is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Cogent Communications Holdings and New Residential Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Residential Inve 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 New Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Residential Inve has no effect on the direction of Cogent Communications i.e., Cogent Communications and New Residential go up and down completely randomly.
Pair Corralation between Cogent Communications and New Residential
Assuming the 90 days trading horizon Cogent Communications Holdings is expected to generate 2.01 times more return on investment than New Residential. However, Cogent Communications is 2.01 times more volatile than New Residential Investment. It trades about 0.16 of its potential returns per unit of risk. New Residential Investment is currently generating about 0.06 per unit of risk. If you would invest 4,688 in Cogent Communications Holdings on September 19, 2024 and sell it today you would earn a total of 2,562 from holding Cogent Communications Holdings or generate 54.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cogent Communications Holdings vs. New Residential Investment
Performance |
| Timeline |
| Cogent Communications |
| New Residential Inve |
Cogent Communications and New Residential Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cogent Communications and New Residential
The main advantage of trading using opposite Cogent Communications and New Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cogent Communications position performs unexpectedly, New Residential 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 New Residential will offset losses from the drop in New Residential's long position.| Cogent Communications vs. Superior Plus Corp | Cogent Communications vs. SIVERS SEMICONDUCTORS AB | Cogent Communications vs. Norsk Hydro ASA | Cogent Communications vs. Reliance Steel Aluminum |
| New Residential vs. Aluminum of | New Residential vs. DATANG INTL POW | New Residential vs. DICKER DATA LTD | New Residential vs. Datadog |
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 Stocks Directory module to find actively traded stocks across global markets.
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