Correlation Between Cogent Communications and Pembina Pipeline
Can any of the company-specific risk be diversified away by investing in both Cogent Communications and Pembina Pipeline 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 Pembina Pipeline 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 Pembina Pipeline Corp, you can compare the effects of market volatilities on Cogent Communications and Pembina Pipeline 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 Pembina Pipeline. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cogent Communications and Pembina Pipeline.
Diversification Opportunities for Cogent Communications and Pembina Pipeline
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Cogent and Pembina is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Cogent Communications Holdings and Pembina Pipeline Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pembina Pipeline Corp 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 Pembina Pipeline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pembina Pipeline Corp has no effect on the direction of Cogent Communications i.e., Cogent Communications and Pembina Pipeline go up and down completely randomly.
Pair Corralation between Cogent Communications and Pembina Pipeline
Assuming the 90 days trading horizon Cogent Communications Holdings is expected to generate 1.53 times more return on investment than Pembina Pipeline. However, Cogent Communications is 1.53 times more volatile than Pembina Pipeline Corp. It trades about 0.11 of its potential returns per unit of risk. Pembina Pipeline Corp is currently generating about 0.08 per unit of risk. If you would invest 7,406 in Cogent Communications Holdings on August 29, 2024 and sell it today you would earn a total of 394.00 from holding Cogent Communications Holdings or generate 5.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Cogent Communications Holdings vs. Pembina Pipeline Corp
Performance |
| Timeline |
| Cogent Communications |
| Pembina Pipeline Corp |
Cogent Communications and Pembina Pipeline Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cogent Communications and Pembina Pipeline
The main advantage of trading using opposite Cogent Communications and Pembina Pipeline positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cogent Communications position performs unexpectedly, Pembina Pipeline 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 Pembina Pipeline will offset losses from the drop in Pembina Pipeline's long position.| Cogent Communications vs. Verizon Communications | Cogent Communications vs. ATT Inc | Cogent Communications vs. ATT Inc | Cogent Communications vs. Deutsche Telekom AG |
| Pembina Pipeline vs. Enbridge | Pembina Pipeline vs. Kinder Morgan | Pembina Pipeline vs. Targa Resources Corp |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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