Correlation Between Cogent Communications and SPORTING
Can any of the company-specific risk be diversified away by investing in both Cogent Communications and SPORTING 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 SPORTING 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 SPORTING, you can compare the effects of market volatilities on Cogent Communications and SPORTING 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 SPORTING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cogent Communications and SPORTING.
Diversification Opportunities for Cogent Communications and SPORTING
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cogent and SPORTING is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Cogent Communications Holdings and SPORTING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPORTING 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 SPORTING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPORTING has no effect on the direction of Cogent Communications i.e., Cogent Communications and SPORTING go up and down completely randomly.
Pair Corralation between Cogent Communications and SPORTING
Assuming the 90 days trading horizon Cogent Communications Holdings is expected to generate 1.05 times more return on investment than SPORTING. However, Cogent Communications is 1.05 times more volatile than SPORTING. It trades about 0.06 of its potential returns per unit of risk. SPORTING is currently generating about 0.05 per unit of risk. If you would invest 5,331 in Cogent Communications Holdings on September 2, 2024 and sell it today you would earn a total of 2,369 from holding Cogent Communications Holdings or generate 44.44% 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. SPORTING
Performance |
| Timeline |
| Cogent Communications |
| SPORTING |
Cogent Communications and SPORTING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cogent Communications and SPORTING
The main advantage of trading using opposite Cogent Communications and SPORTING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cogent Communications position performs unexpectedly, SPORTING 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 SPORTING will offset losses from the drop in SPORTING's long position.| Cogent Communications vs. Calibre Mining Corp | Cogent Communications vs. FUYO GENERAL LEASE | Cogent Communications vs. MINCO SILVER | Cogent Communications vs. Apollo Investment Corp |
| SPORTING vs. SIVERS SEMICONDUCTORS AB | SPORTING vs. Darden Restaurants | SPORTING vs. Reliance Steel Aluminum | SPORTING vs. Q2M Managementberatung AG |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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