Correlation Between Cogent Communications and Chesapeake Utilities
Can any of the company-specific risk be diversified away by investing in both Cogent Communications and Chesapeake Utilities 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 Chesapeake Utilities 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 Chesapeake Utilities, you can compare the effects of market volatilities on Cogent Communications and Chesapeake Utilities 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 Chesapeake Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cogent Communications and Chesapeake Utilities.
Diversification Opportunities for Cogent Communications and Chesapeake Utilities
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Cogent and Chesapeake is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Cogent Communications Holdings and Chesapeake Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Utilities 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 Chesapeake Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chesapeake Utilities has no effect on the direction of Cogent Communications i.e., Cogent Communications and Chesapeake Utilities go up and down completely randomly.
Pair Corralation between Cogent Communications and Chesapeake Utilities
Assuming the 90 days trading horizon Cogent Communications Holdings is expected to under-perform the Chesapeake Utilities. In addition to that, Cogent Communications is 1.21 times more volatile than Chesapeake Utilities. It trades about -0.08 of its total potential returns per unit of risk. Chesapeake Utilities is currently generating about 0.23 per unit of volatility. If you would invest 11,400 in Chesapeake Utilities on October 22, 2024 and sell it today you would earn a total of 500.00 from holding Chesapeake Utilities or generate 4.39% 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. Chesapeake Utilities
Performance |
| Timeline |
| Cogent Communications |
| Chesapeake Utilities |
Cogent Communications and Chesapeake Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cogent Communications and Chesapeake Utilities
The main advantage of trading using opposite Cogent Communications and Chesapeake Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cogent Communications position performs unexpectedly, Chesapeake Utilities 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 Chesapeake Utilities will offset losses from the drop in Chesapeake Utilities' long position.| Cogent Communications vs. MHP Hotel AG | Cogent Communications vs. HYATT HOTELS A | Cogent Communications vs. Zoom Video Communications | Cogent Communications vs. InterContinental Hotels Group |
| Chesapeake Utilities vs. INSURANCE AUST GRP | Chesapeake Utilities vs. QBE Insurance Group | Chesapeake Utilities vs. PRECISION DRILLING P | Chesapeake Utilities vs. FIH MOBILE |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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