Correlation Between Cogent Communications and CDN IMPERIAL
Can any of the company-specific risk be diversified away by investing in both Cogent Communications and CDN IMPERIAL 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 CDN IMPERIAL 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 CDN IMPERIAL BANK, you can compare the effects of market volatilities on Cogent Communications and CDN IMPERIAL 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 CDN IMPERIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cogent Communications and CDN IMPERIAL.
Diversification Opportunities for Cogent Communications and CDN IMPERIAL
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cogent and CDN is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Cogent Communications Holdings and CDN IMPERIAL BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDN IMPERIAL BANK 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 CDN IMPERIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDN IMPERIAL BANK has no effect on the direction of Cogent Communications i.e., Cogent Communications and CDN IMPERIAL go up and down completely randomly.
Pair Corralation between Cogent Communications and CDN IMPERIAL
Assuming the 90 days trading horizon Cogent Communications is expected to generate 1.74 times less return on investment than CDN IMPERIAL. In addition to that, Cogent Communications is 1.9 times more volatile than CDN IMPERIAL BANK. It trades about 0.06 of its total potential returns per unit of risk. CDN IMPERIAL BANK is currently generating about 0.21 per unit of volatility. If you would invest 3,251 in CDN IMPERIAL BANK on September 1, 2024 and sell it today you would earn a total of 2,868 from holding CDN IMPERIAL BANK or generate 88.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cogent Communications Holdings vs. CDN IMPERIAL BANK
Performance |
| Timeline |
| Cogent Communications |
| CDN IMPERIAL BANK |
Cogent Communications and CDN IMPERIAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cogent Communications and CDN IMPERIAL
The main advantage of trading using opposite Cogent Communications and CDN IMPERIAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cogent Communications position performs unexpectedly, CDN IMPERIAL 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 CDN IMPERIAL will offset losses from the drop in CDN IMPERIAL's long position.| Cogent Communications vs. Perma Fix Environmental Services | Cogent Communications vs. Nippon Steel | Cogent Communications vs. Insteel Industries | Cogent Communications vs. Caltagirone SpA |
| CDN IMPERIAL vs. Perseus Mining Limited | CDN IMPERIAL vs. ECHO INVESTMENT ZY | CDN IMPERIAL vs. LION ONE METALS | CDN IMPERIAL vs. GREENX METALS LTD |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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