Correlation Between Cogent Communications and Gladstone Investment
Can any of the company-specific risk be diversified away by investing in both Cogent Communications and Gladstone Investment 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 Gladstone Investment 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 Gladstone Investment, you can compare the effects of market volatilities on Cogent Communications and Gladstone Investment 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 Gladstone Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cogent Communications and Gladstone Investment.
Diversification Opportunities for Cogent Communications and Gladstone Investment
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cogent and Gladstone is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Cogent Communications Holdings and Gladstone Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Investment 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 Gladstone Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gladstone Investment has no effect on the direction of Cogent Communications i.e., Cogent Communications and Gladstone Investment go up and down completely randomly.
Pair Corralation between Cogent Communications and Gladstone Investment
Assuming the 90 days trading horizon Cogent Communications Holdings is expected to under-perform the Gladstone Investment. In addition to that, Cogent Communications is 1.06 times more volatile than Gladstone Investment. It trades about -0.08 of its total potential returns per unit of risk. Gladstone Investment is currently generating about -0.06 per unit of volatility. If you would invest 1,287 in Gladstone Investment on October 11, 2024 and sell it today you would lose (26.00) from holding Gladstone Investment or give up 2.02% 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. Gladstone Investment
Performance |
| Timeline |
| Cogent Communications |
| Gladstone Investment |
Cogent Communications and Gladstone Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cogent Communications and Gladstone Investment
The main advantage of trading using opposite Cogent Communications and Gladstone Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cogent Communications position performs unexpectedly, Gladstone Investment 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 Gladstone Investment will offset losses from the drop in Gladstone Investment's long position.| Cogent Communications vs. NTT DATA | Cogent Communications vs. TERADATA | Cogent Communications vs. Alliance Data Systems | Cogent Communications vs. MICRONIC MYDATA |
| Gladstone Investment vs. T Mobile | Gladstone Investment vs. Cogent Communications Holdings | Gladstone Investment vs. YOOMA WELLNESS INC | Gladstone Investment vs. MOBILE FACTORY INC |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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