Correlation Between Cogent Communications and Dollar General
Can any of the company-specific risk be diversified away by investing in both Cogent Communications and Dollar General 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 Dollar General 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 Dollar General, you can compare the effects of market volatilities on Cogent Communications and Dollar General 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 Dollar General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cogent Communications and Dollar General.
Diversification Opportunities for Cogent Communications and Dollar General
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cogent and Dollar is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Cogent Communications Holdings and Dollar General in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dollar General 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 Dollar General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dollar General has no effect on the direction of Cogent Communications i.e., Cogent Communications and Dollar General go up and down completely randomly.
Pair Corralation between Cogent Communications and Dollar General
Assuming the 90 days trading horizon Cogent Communications Holdings is expected to generate 0.86 times more return on investment than Dollar General. However, Cogent Communications Holdings is 1.16 times less risky than Dollar General. It trades about 0.05 of its potential returns per unit of risk. Dollar General is currently generating about -0.07 per unit of risk. If you would invest 4,675 in Cogent Communications Holdings on September 15, 2024 and sell it today you would earn a total of 2,475 from holding Cogent Communications Holdings or generate 52.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cogent Communications Holdings vs. Dollar General
Performance |
| Timeline |
| Cogent Communications |
| Dollar General |
Cogent Communications and Dollar General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cogent Communications and Dollar General
The main advantage of trading using opposite Cogent Communications and Dollar General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cogent Communications position performs unexpectedly, Dollar General 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 Dollar General will offset losses from the drop in Dollar General'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 |
| Dollar General vs. Sumitomo Rubber Industries | Dollar General vs. Astral Foods Limited | Dollar General vs. Lifeway Foods | Dollar General vs. PREMIER FOODS |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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