Correlation Between Profound Medical and Cogeco Communications
Can any of the company-specific risk be diversified away by investing in both Profound Medical and Cogeco 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 Profound Medical and Cogeco Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Profound Medical Corp and Cogeco Communications, you can compare the effects of market volatilities on Profound Medical and Cogeco 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 Profound Medical with a short position of Cogeco Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Profound Medical and Cogeco Communications.
Diversification Opportunities for Profound Medical and Cogeco Communications
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Profound and Cogeco is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Profound Medical Corp and Cogeco Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogeco Communications and Profound Medical 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 Profound Medical Corp are associated (or correlated) with Cogeco Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cogeco Communications has no effect on the direction of Profound Medical i.e., Profound Medical and Cogeco Communications go up and down completely randomly.
Pair Corralation between Profound Medical and Cogeco Communications
Assuming the 90 days trading horizon Profound Medical Corp is expected to generate 2.91 times more return on investment than Cogeco Communications. However, Profound Medical is 2.91 times more volatile than Cogeco Communications. It trades about 0.16 of its potential returns per unit of risk. Cogeco Communications is currently generating about 0.04 per unit of risk. If you would invest 1,015 in Profound Medical Corp on September 1, 2024 and sell it today you would earn a total of 129.00 from holding Profound Medical Corp or generate 12.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Profound Medical Corp vs. Cogeco Communications
Performance |
| Timeline |
| Profound Medical Corp |
| Cogeco Communications |
Profound Medical and Cogeco Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Profound Medical and Cogeco Communications
The main advantage of trading using opposite Profound Medical and Cogeco Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Profound Medical position performs unexpectedly, Cogeco 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 Cogeco Communications will offset losses from the drop in Cogeco Communications' long position.| Profound Medical vs. Orca Energy Group | Profound Medical vs. Rogers Communications | Profound Medical vs. Aclara Resources | Profound Medical vs. Greenfire Resources |
| Cogeco Communications vs. Cogeco Inc | Cogeco Communications vs. Quebecor | Cogeco Communications vs. Transcontinental | Cogeco Communications vs. Stella Jones |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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