Correlation Between Cogent Communications and Franco Nevada
Can any of the company-specific risk be diversified away by investing in both Cogent Communications and Franco Nevada 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 Franco Nevada 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 Franco Nevada, you can compare the effects of market volatilities on Cogent Communications and Franco Nevada 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 Franco Nevada. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cogent Communications and Franco Nevada.
Diversification Opportunities for Cogent Communications and Franco Nevada
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Cogent and Franco is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Cogent Communications Holdings and Franco Nevada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franco Nevada 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 Franco Nevada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franco Nevada has no effect on the direction of Cogent Communications i.e., Cogent Communications and Franco Nevada go up and down completely randomly.
Pair Corralation between Cogent Communications and Franco Nevada
Assuming the 90 days trading horizon Cogent Communications Holdings is expected to generate 1.21 times more return on investment than Franco Nevada. However, Cogent Communications is 1.21 times more volatile than Franco Nevada. It trades about 0.05 of its potential returns per unit of risk. Franco Nevada is currently generating about 0.03 per unit of risk. If you would invest 5,643 in Cogent Communications Holdings on September 15, 2024 and sell it today you would earn a total of 1,507 from holding Cogent Communications Holdings or generate 26.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cogent Communications Holdings vs. Franco Nevada
Performance |
| Timeline |
| Cogent Communications |
| Franco Nevada |
Cogent Communications and Franco Nevada Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cogent Communications and Franco Nevada
The main advantage of trading using opposite Cogent Communications and Franco Nevada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cogent Communications position performs unexpectedly, Franco Nevada 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 Franco Nevada will offset losses from the drop in Franco Nevada'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 |
| Franco Nevada vs. Cogent Communications Holdings | Franco Nevada vs. COMBA TELECOM SYST | Franco Nevada vs. Charter Communications | Franco Nevada vs. MINCO SILVER |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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