Correlation Between STRAYER EDUCATION and Cogent Communications
Can any of the company-specific risk be diversified away by investing in both STRAYER EDUCATION 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 STRAYER EDUCATION and Cogent Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STRAYER EDUCATION and Cogent Communications Holdings, you can compare the effects of market volatilities on STRAYER EDUCATION 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 STRAYER EDUCATION with a short position of Cogent Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of STRAYER EDUCATION and Cogent Communications.
Diversification Opportunities for STRAYER EDUCATION and Cogent Communications
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between STRAYER and Cogent is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding STRAYER EDUCATION and Cogent Communications Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogent Communications and STRAYER EDUCATION 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 STRAYER EDUCATION 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 STRAYER EDUCATION i.e., STRAYER EDUCATION and Cogent Communications go up and down completely randomly.
Pair Corralation between STRAYER EDUCATION and Cogent Communications
Assuming the 90 days trading horizon STRAYER EDUCATION is expected to generate 1.64 times less return on investment than Cogent Communications. But when comparing it to its historical volatility, STRAYER EDUCATION is 1.07 times less risky than Cogent Communications. It trades about 0.04 of its potential returns per unit of risk. Cogent Communications Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 4,675 in Cogent Communications Holdings on September 3, 2024 and sell it today you would earn a total of 3,025 from holding Cogent Communications Holdings or generate 64.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
STRAYER EDUCATION vs. Cogent Communications Holdings
Performance |
| Timeline |
| STRAYER EDUCATION |
| Cogent Communications |
STRAYER EDUCATION and Cogent Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STRAYER EDUCATION and Cogent Communications
The main advantage of trading using opposite STRAYER EDUCATION and Cogent Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STRAYER EDUCATION 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.| STRAYER EDUCATION vs. United Rentals | STRAYER EDUCATION vs. Caseys General Stores | STRAYER EDUCATION vs. Zijin Mining Group | STRAYER EDUCATION vs. Costco Wholesale Corp |
| Cogent Communications vs. T Mobile | Cogent Communications vs. China Mobile Limited | Cogent Communications vs. ATT Inc | Cogent Communications vs. Nippon Telegraph and |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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