Correlation Between Cogent Communications and Perdoceo Education
Can any of the company-specific risk be diversified away by investing in both Cogent Communications and Perdoceo Education 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 Perdoceo Education 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 Perdoceo Education, you can compare the effects of market volatilities on Cogent Communications and Perdoceo Education 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 Perdoceo Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cogent Communications and Perdoceo Education.
Diversification Opportunities for Cogent Communications and Perdoceo Education
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cogent and Perdoceo is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Cogent Communications Holdings and Perdoceo Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perdoceo Education 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 Perdoceo Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perdoceo Education has no effect on the direction of Cogent Communications i.e., Cogent Communications and Perdoceo Education go up and down completely randomly.
Pair Corralation between Cogent Communications and Perdoceo Education
Assuming the 90 days trading horizon Cogent Communications is expected to generate 4.57 times less return on investment than Perdoceo Education. But when comparing it to its historical volatility, Cogent Communications Holdings is 1.66 times less risky than Perdoceo Education. It trades about 0.12 of its potential returns per unit of risk. Perdoceo Education is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 1,990 in Perdoceo Education on August 30, 2024 and sell it today you would earn a total of 630.00 from holding Perdoceo Education or generate 31.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cogent Communications Holdings vs. Perdoceo Education
Performance |
| Timeline |
| Cogent Communications |
| Perdoceo Education |
Cogent Communications and Perdoceo Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cogent Communications and Perdoceo Education
The main advantage of trading using opposite Cogent Communications and Perdoceo Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cogent Communications position performs unexpectedly, Perdoceo Education 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 Perdoceo Education will offset losses from the drop in Perdoceo Education's long position.| Cogent Communications vs. Auto Trader Group | Cogent Communications vs. MACOM Technology Solutions | Cogent Communications vs. SALESFORCE INC CDR | Cogent Communications vs. Microchip Technology Incorporated |
| Perdoceo Education vs. MTI WIRELESS EDGE | Perdoceo Education vs. Cogent Communications Holdings | Perdoceo Education vs. Gamma Communications plc | Perdoceo Education vs. Cleanaway Waste Management |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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