Correlation Between Cogent Communications and Walgreens Boots
Can any of the company-specific risk be diversified away by investing in both Cogent Communications and Walgreens Boots 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 Walgreens Boots 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 Walgreens Boots Alliance, you can compare the effects of market volatilities on Cogent Communications and Walgreens Boots 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 Walgreens Boots. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cogent Communications and Walgreens Boots.
Diversification Opportunities for Cogent Communications and Walgreens Boots
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cogent and Walgreens is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Cogent Communications Holdings and Walgreens Boots Alliance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walgreens Boots Alliance 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 Walgreens Boots. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walgreens Boots Alliance has no effect on the direction of Cogent Communications i.e., Cogent Communications and Walgreens Boots go up and down completely randomly.
Pair Corralation between Cogent Communications and Walgreens Boots
Assuming the 90 days trading horizon Cogent Communications Holdings is expected to under-perform the Walgreens Boots. But the stock apears to be less risky and, when comparing its historical volatility, Cogent Communications Holdings is 5.32 times less risky than Walgreens Boots. The stock trades about -0.08 of its potential returns per unit of risk. The Walgreens Boots Alliance is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 890.00 in Walgreens Boots Alliance on October 24, 2024 and sell it today you would earn a total of 204.00 from holding Walgreens Boots Alliance or generate 22.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
Cogent Communications Holdings vs. Walgreens Boots Alliance
Performance |
| Timeline |
| Cogent Communications |
| Walgreens Boots Alliance |
Cogent Communications and Walgreens Boots Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cogent Communications and Walgreens Boots
The main advantage of trading using opposite Cogent Communications and Walgreens Boots positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cogent Communications position performs unexpectedly, Walgreens Boots 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 Walgreens Boots will offset losses from the drop in Walgreens Boots' long position.| Cogent Communications vs. ecotel communication ag | Cogent Communications vs. CHRYSALIS INVESTMENTS LTD | Cogent Communications vs. AOYAMA TRADING | Cogent Communications vs. Genco Shipping Trading |
| Walgreens Boots vs. Hitachi Construction Machinery | Walgreens Boots vs. Dairy Farm International | Walgreens Boots vs. Gruppo Mutuionline SpA | Walgreens Boots vs. CODERE ONLINE LUX |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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