Correlation Between Cogent Communications and LOANDEPOT INC
Can any of the company-specific risk be diversified away by investing in both Cogent Communications and LOANDEPOT INC 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 LOANDEPOT INC 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 LOANDEPOT INC A, you can compare the effects of market volatilities on Cogent Communications and LOANDEPOT INC 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 LOANDEPOT INC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cogent Communications and LOANDEPOT INC.
Diversification Opportunities for Cogent Communications and LOANDEPOT INC
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Cogent and LOANDEPOT is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Cogent Communications Holdings and LOANDEPOT INC A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LOANDEPOT INC A 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 LOANDEPOT INC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LOANDEPOT INC A has no effect on the direction of Cogent Communications i.e., Cogent Communications and LOANDEPOT INC go up and down completely randomly.
Pair Corralation between Cogent Communications and LOANDEPOT INC
Assuming the 90 days trading horizon Cogent Communications Holdings is expected to generate 0.57 times more return on investment than LOANDEPOT INC. However, Cogent Communications Holdings is 1.74 times less risky than LOANDEPOT INC. It trades about 0.14 of its potential returns per unit of risk. LOANDEPOT INC A is currently generating about -0.13 per unit of risk. If you would invest 7,100 in Cogent Communications Holdings on November 29, 2024 and sell it today you would earn a total of 400.00 from holding Cogent Communications Holdings or generate 5.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cogent Communications Holdings vs. LOANDEPOT INC A
Performance |
| Timeline |
| Cogent Communications |
| LOANDEPOT INC A |
Cogent Communications and LOANDEPOT INC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cogent Communications and LOANDEPOT INC
The main advantage of trading using opposite Cogent Communications and LOANDEPOT INC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cogent Communications position performs unexpectedly, LOANDEPOT INC 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 LOANDEPOT INC will offset losses from the drop in LOANDEPOT INC's long position.| Cogent Communications vs. Salesforce | Cogent Communications vs. Austevoll Seafood ASA | Cogent Communications vs. CONAGRA FOODS | Cogent Communications vs. CANON MARKETING JP |
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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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