Correlation Between Cogent Communications and Commonwealth Bank
Can any of the company-specific risk be diversified away by investing in both Cogent Communications and Commonwealth Bank 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 Commonwealth Bank 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 Commonwealth Bank of, you can compare the effects of market volatilities on Cogent Communications and Commonwealth Bank 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 Commonwealth Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cogent Communications and Commonwealth Bank.
Diversification Opportunities for Cogent Communications and Commonwealth Bank
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cogent and Commonwealth is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Cogent Communications Holdings and Commonwealth Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commonwealth 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 Commonwealth Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commonwealth Bank has no effect on the direction of Cogent Communications i.e., Cogent Communications and Commonwealth Bank go up and down completely randomly.
Pair Corralation between Cogent Communications and Commonwealth Bank
Assuming the 90 days trading horizon Cogent Communications Holdings is expected to generate 1.67 times more return on investment than Commonwealth Bank. However, Cogent Communications is 1.67 times more volatile than Commonwealth Bank of. It trades about 0.2 of its potential returns per unit of risk. Commonwealth Bank of is currently generating about -0.02 per unit of risk. If you would invest 7,100 in Cogent Communications Holdings on November 27, 2024 and sell it today you would earn a total of 550.00 from holding Cogent Communications Holdings or generate 7.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cogent Communications Holdings vs. Commonwealth Bank of
Performance |
| Timeline |
| Cogent Communications |
| Commonwealth Bank |
Cogent Communications and Commonwealth Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cogent Communications and Commonwealth Bank
The main advantage of trading using opposite Cogent Communications and Commonwealth Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cogent Communications position performs unexpectedly, Commonwealth Bank 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 Commonwealth Bank will offset losses from the drop in Commonwealth Bank's long position.| Cogent Communications vs. PARKEN Sport Entertainment | Cogent Communications vs. Universal Entertainment | Cogent Communications vs. CNVISION MEDIA | Cogent Communications vs. SQUIRREL MEDIA SA |
| Commonwealth Bank vs. KIMBALL ELECTRONICS | Commonwealth Bank vs. SOUTHWEST AIRLINES | Commonwealth Bank vs. Schweizer Electronic AG | Commonwealth Bank vs. American Airlines Group |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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