Correlation Between Cogent Communications and Take-Two Interactive
Can any of the company-specific risk be diversified away by investing in both Cogent Communications and Take-Two Interactive 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 Take-Two Interactive 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 Take Two Interactive Software, you can compare the effects of market volatilities on Cogent Communications and Take-Two Interactive 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 Take-Two Interactive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cogent Communications and Take-Two Interactive.
Diversification Opportunities for Cogent Communications and Take-Two Interactive
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cogent and Take-Two is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Cogent Communications Holdings and Take Two Interactive Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Take Two Interactive 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 Take-Two Interactive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Take Two Interactive has no effect on the direction of Cogent Communications i.e., Cogent Communications and Take-Two Interactive go up and down completely randomly.
Pair Corralation between Cogent Communications and Take-Two Interactive
Assuming the 90 days trading horizon Cogent Communications is expected to generate 2.36 times less return on investment than Take-Two Interactive. In addition to that, Cogent Communications is 1.31 times more volatile than Take Two Interactive Software. It trades about 0.14 of its total potential returns per unit of risk. Take Two Interactive Software is currently generating about 0.44 per unit of volatility. If you would invest 15,072 in Take Two Interactive Software on September 5, 2024 and sell it today you would earn a total of 2,780 from holding Take Two Interactive Software or generate 18.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Cogent Communications Holdings vs. Take Two Interactive Software
Performance |
| Timeline |
| Cogent Communications |
| Take Two Interactive |
Cogent Communications and Take-Two Interactive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cogent Communications and Take-Two Interactive
The main advantage of trading using opposite Cogent Communications and Take-Two Interactive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cogent Communications position performs unexpectedly, Take-Two Interactive 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 Take-Two Interactive will offset losses from the drop in Take-Two Interactive's long position.| Cogent Communications vs. RCM TECHNOLOGIES | Cogent Communications vs. Mitsui Chemicals | Cogent Communications vs. NetSol Technologies | Cogent Communications vs. Spirent Communications plc |
| Take-Two Interactive vs. REINET INVESTMENTS SCA | Take-Two Interactive vs. AOYAMA TRADING | Take-Two Interactive vs. Cogent Communications Holdings | Take-Two Interactive vs. Charter Communications |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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