Correlation Between ATT and Cogent Communications
Can any of the company-specific risk be diversified away by investing in both ATT 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 ATT and Cogent Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATT Inc and Cogent Communications Group, you can compare the effects of market volatilities on ATT 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 ATT with a short position of Cogent Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and Cogent Communications.
Diversification Opportunities for ATT and Cogent Communications
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ATT and Cogent is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and Cogent Communications Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogent Communications and ATT 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 ATT Inc 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 ATT i.e., ATT and Cogent Communications go up and down completely randomly.
Pair Corralation between ATT and Cogent Communications
Taking into account the 90-day investment horizon ATT Inc is expected to generate 0.62 times more return on investment than Cogent Communications. However, ATT Inc is 1.62 times less risky than Cogent Communications. It trades about 0.13 of its potential returns per unit of risk. Cogent Communications Group is currently generating about 0.07 per unit of risk. If you would invest 1,561 in ATT Inc on August 26, 2024 and sell it today you would earn a total of 757.00 from holding ATT Inc or generate 48.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ATT Inc vs. Cogent Communications Group
Performance |
| Timeline |
| ATT Inc |
| Cogent Communications |
ATT and Cogent Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATT and Cogent Communications
The main advantage of trading using opposite ATT and Cogent Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT 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.| ATT vs. Cogent Communications Group | ATT vs. Liberty Broadband Srs | ATT vs. Ribbon Communications | ATT vs. Liberty Broadband Srs |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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