Correlation Between MODIVCARE INC and Cogent Communications
Can any of the company-specific risk be diversified away by investing in both MODIVCARE INC and Cogent Communications 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 MODIVCARE INC and Cogent Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MODIVCARE INC DL 001 and Cogent Communications Holdings, you can compare the effects of market volatilities on MODIVCARE INC and Cogent Communications 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 MODIVCARE INC with a short position of Cogent Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of MODIVCARE INC and Cogent Communications.
Diversification Opportunities for MODIVCARE INC and Cogent Communications
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between MODIVCARE and Cogent is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding MODIVCARE INC DL 001 and Cogent Communications Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogent Communications and MODIVCARE INC 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 MODIVCARE INC DL 001 are associated (or correlated) with Cogent Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cogent Communications has no effect on the direction of MODIVCARE INC i.e., MODIVCARE INC and Cogent Communications go up and down completely randomly.
Pair Corralation between MODIVCARE INC and Cogent Communications
Assuming the 90 days trading horizon MODIVCARE INC DL 001 is expected to generate 1.78 times more return on investment than Cogent Communications. However, MODIVCARE INC is 1.78 times more volatile than Cogent Communications Holdings. It trades about 0.3 of its potential returns per unit of risk. Cogent Communications Holdings is currently generating about -0.12 per unit of risk. If you would invest 1,410 in MODIVCARE INC DL 001 on September 12, 2024 and sell it today you would earn a total of 340.00 from holding MODIVCARE INC DL 001 or generate 24.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
MODIVCARE INC DL 001 vs. Cogent Communications Holdings
Performance |
| Timeline |
| MODIVCARE INC DL |
| Cogent Communications |
MODIVCARE INC and Cogent Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MODIVCARE INC and Cogent Communications
The main advantage of trading using opposite MODIVCARE INC and Cogent Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MODIVCARE INC position performs unexpectedly, Cogent Communications 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 Cogent Communications will offset losses from the drop in Cogent Communications' long position.| MODIVCARE INC vs. PennantPark Investment | MODIVCARE INC vs. Coeur Mining | MODIVCARE INC vs. GALENA MINING LTD | MODIVCARE INC vs. SLR Investment Corp |
| Cogent Communications vs. Superior Plus Corp | Cogent Communications vs. SIVERS SEMICONDUCTORS AB | Cogent Communications vs. Norsk Hydro ASA | Cogent Communications vs. Reliance Steel Aluminum |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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