Correlation Between Cogent Communications and NOVAGOLD RESOURCES
Can any of the company-specific risk be diversified away by investing in both Cogent Communications and NOVAGOLD RESOURCES 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 NOVAGOLD RESOURCES 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 NOVAGOLD RESOURCES, you can compare the effects of market volatilities on Cogent Communications and NOVAGOLD RESOURCES 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 NOVAGOLD RESOURCES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cogent Communications and NOVAGOLD RESOURCES.
Diversification Opportunities for Cogent Communications and NOVAGOLD RESOURCES
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cogent and NOVAGOLD is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Cogent Communications Holdings and NOVAGOLD RESOURCES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NOVAGOLD RESOURCES 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 NOVAGOLD RESOURCES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NOVAGOLD RESOURCES has no effect on the direction of Cogent Communications i.e., Cogent Communications and NOVAGOLD RESOURCES go up and down completely randomly.
Pair Corralation between Cogent Communications and NOVAGOLD RESOURCES
Assuming the 90 days trading horizon Cogent Communications Holdings is expected to generate 0.63 times more return on investment than NOVAGOLD RESOURCES. However, Cogent Communications Holdings is 1.59 times less risky than NOVAGOLD RESOURCES. It trades about 0.1 of its potential returns per unit of risk. NOVAGOLD RESOURCES is currently generating about -0.07 per unit of risk. If you would invest 6,271 in Cogent Communications Holdings on September 20, 2024 and sell it today you would earn a total of 779.00 from holding Cogent Communications Holdings or generate 12.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cogent Communications Holdings vs. NOVAGOLD RESOURCES
Performance |
| Timeline |
| Cogent Communications |
| NOVAGOLD RESOURCES |
Cogent Communications and NOVAGOLD RESOURCES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cogent Communications and NOVAGOLD RESOURCES
The main advantage of trading using opposite Cogent Communications and NOVAGOLD RESOURCES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cogent Communications position performs unexpectedly, NOVAGOLD RESOURCES 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 NOVAGOLD RESOURCES will offset losses from the drop in NOVAGOLD RESOURCES's long position.| Cogent Communications vs. Superior Plus Corp | Cogent Communications vs. SIVERS SEMICONDUCTORS AB | Cogent Communications vs. Norsk Hydro ASA | Cogent Communications vs. Reliance Steel Aluminum |
| NOVAGOLD RESOURCES vs. Host Hotels Resorts | NOVAGOLD RESOURCES vs. PT Bank Maybank | NOVAGOLD RESOURCES vs. REVO INSURANCE SPA | NOVAGOLD RESOURCES vs. CHIBA BANK |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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