Correlation Between Cogent Communications and TEXAS ROADHOUSE
Can any of the company-specific risk be diversified away by investing in both Cogent Communications and TEXAS ROADHOUSE 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 TEXAS ROADHOUSE 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 TEXAS ROADHOUSE, you can compare the effects of market volatilities on Cogent Communications and TEXAS ROADHOUSE 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 TEXAS ROADHOUSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cogent Communications and TEXAS ROADHOUSE.
Diversification Opportunities for Cogent Communications and TEXAS ROADHOUSE
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cogent and TEXAS is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Cogent Communications Holdings and TEXAS ROADHOUSE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TEXAS ROADHOUSE 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 TEXAS ROADHOUSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TEXAS ROADHOUSE has no effect on the direction of Cogent Communications i.e., Cogent Communications and TEXAS ROADHOUSE go up and down completely randomly.
Pair Corralation between Cogent Communications and TEXAS ROADHOUSE
Assuming the 90 days trading horizon Cogent Communications Holdings is expected to generate 1.24 times more return on investment than TEXAS ROADHOUSE. However, Cogent Communications is 1.24 times more volatile than TEXAS ROADHOUSE. It trades about 0.14 of its potential returns per unit of risk. TEXAS ROADHOUSE is currently generating about 0.14 per unit of risk. If you would invest 7,406 in Cogent Communications Holdings on August 27, 2024 and sell it today you would earn a total of 494.00 from holding Cogent Communications Holdings or generate 6.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cogent Communications Holdings vs. TEXAS ROADHOUSE
Performance |
| Timeline |
| Cogent Communications |
| TEXAS ROADHOUSE |
Cogent Communications and TEXAS ROADHOUSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cogent Communications and TEXAS ROADHOUSE
The main advantage of trading using opposite Cogent Communications and TEXAS ROADHOUSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cogent Communications position performs unexpectedly, TEXAS ROADHOUSE 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 TEXAS ROADHOUSE will offset losses from the drop in TEXAS ROADHOUSE's long position.| Cogent Communications vs. T Mobile | Cogent Communications vs. ATT Inc | Cogent Communications vs. Deutsche Telekom AG |
| TEXAS ROADHOUSE vs. Apple Inc | TEXAS ROADHOUSE vs. Apple Inc | TEXAS ROADHOUSE vs. Apple Inc | TEXAS ROADHOUSE vs. Microsoft |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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