Correlation Between Cogent Communications and Whitehaven Coal
Can any of the company-specific risk be diversified away by investing in both Cogent Communications and Whitehaven Coal 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 Whitehaven Coal 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 Whitehaven Coal Limited, you can compare the effects of market volatilities on Cogent Communications and Whitehaven Coal 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 Whitehaven Coal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cogent Communications and Whitehaven Coal.
Diversification Opportunities for Cogent Communications and Whitehaven Coal
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cogent and Whitehaven is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Cogent Communications Holdings and Whitehaven Coal Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whitehaven Coal 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 Whitehaven Coal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whitehaven Coal has no effect on the direction of Cogent Communications i.e., Cogent Communications and Whitehaven Coal go up and down completely randomly.
Pair Corralation between Cogent Communications and Whitehaven Coal
Assuming the 90 days trading horizon Cogent Communications Holdings is expected to generate 0.9 times more return on investment than Whitehaven Coal. However, Cogent Communications Holdings is 1.12 times less risky than Whitehaven Coal. It trades about 0.04 of its potential returns per unit of risk. Whitehaven Coal Limited is currently generating about 0.0 per unit of risk. If you would invest 5,109 in Cogent Communications Holdings on November 30, 2024 and sell it today you would earn a total of 1,691 from holding Cogent Communications Holdings or generate 33.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Cogent Communications Holdings vs. Whitehaven Coal Limited
Performance |
| Timeline |
| Cogent Communications |
| Whitehaven Coal |
Cogent Communications and Whitehaven Coal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cogent Communications and Whitehaven Coal
The main advantage of trading using opposite Cogent Communications and Whitehaven Coal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cogent Communications position performs unexpectedly, Whitehaven Coal 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 Whitehaven Coal will offset losses from the drop in Whitehaven Coal's long position.| Cogent Communications vs. United Breweries Co | Cogent Communications vs. MARKET VECTR RETAIL | Cogent Communications vs. Indutrade AB | Cogent Communications vs. National Retail Properties |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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