Correlation Between Cogent Communications and Associated British
Can any of the company-specific risk be diversified away by investing in both Cogent Communications and Associated British 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 Associated British 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 Associated British Foods, you can compare the effects of market volatilities on Cogent Communications and Associated British 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 Associated British. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cogent Communications and Associated British.
Diversification Opportunities for Cogent Communications and Associated British
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cogent and Associated is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Cogent Communications Holdings and Associated British Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Associated British Foods 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 Associated British. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Associated British Foods has no effect on the direction of Cogent Communications i.e., Cogent Communications and Associated British go up and down completely randomly.
Pair Corralation between Cogent Communications and Associated British
Assuming the 90 days trading horizon Cogent Communications Holdings is expected to under-perform the Associated British. In addition to that, Cogent Communications is 1.47 times more volatile than Associated British Foods. It trades about -0.12 of its total potential returns per unit of risk. Associated British Foods is currently generating about -0.08 per unit of volatility. If you would invest 2,702 in Associated British Foods on September 12, 2024 and sell it today you would lose (64.00) from holding Associated British Foods or give up 2.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Cogent Communications Holdings vs. Associated British Foods
Performance |
| Timeline |
| Cogent Communications |
| Associated British Foods |
Cogent Communications and Associated British Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cogent Communications and Associated British
The main advantage of trading using opposite Cogent Communications and Associated British positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cogent Communications position performs unexpectedly, Associated British 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 Associated British will offset losses from the drop in Associated British'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 |
| Associated British vs. Carsales | Associated British vs. Sunstone Hotel Investors | Associated British vs. Xenia Hotels Resorts | Associated British vs. Salesforce |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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