Correlation Between Cogent Communications and Stewart Information
Can any of the company-specific risk be diversified away by investing in both Cogent Communications and Stewart Information 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 Stewart Information 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 Stewart Information Services, you can compare the effects of market volatilities on Cogent Communications and Stewart Information 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 Stewart Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cogent Communications and Stewart Information.
Diversification Opportunities for Cogent Communications and Stewart Information
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Cogent and Stewart is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Cogent Communications Holdings and Stewart Information Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stewart Information 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 Stewart Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stewart Information has no effect on the direction of Cogent Communications i.e., Cogent Communications and Stewart Information go up and down completely randomly.
Pair Corralation between Cogent Communications and Stewart Information
Assuming the 90 days trading horizon Cogent Communications is expected to generate 1.35 times less return on investment than Stewart Information. In addition to that, Cogent Communications is 1.29 times more volatile than Stewart Information Services. It trades about 0.06 of its total potential returns per unit of risk. Stewart Information Services is currently generating about 0.1 per unit of volatility. If you would invest 4,695 in Stewart Information Services on September 3, 2024 and sell it today you would earn a total of 2,155 from holding Stewart Information Services or generate 45.9% 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. Stewart Information Services
Performance |
| Timeline |
| Cogent Communications |
| Stewart Information |
Cogent Communications and Stewart Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cogent Communications and Stewart Information
The main advantage of trading using opposite Cogent Communications and Stewart Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cogent Communications position performs unexpectedly, Stewart Information 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 Stewart Information will offset losses from the drop in Stewart Information's long position.| Cogent Communications vs. T Mobile | Cogent Communications vs. China Mobile Limited | Cogent Communications vs. ATT Inc | Cogent Communications vs. Nippon Telegraph and |
| Stewart Information vs. JAPAN AIRLINES | Stewart Information vs. Mitsui Chemicals | Stewart Information vs. American Airlines Group | Stewart Information vs. American Homes 4 |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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