Correlation Between T MOBILE and Cogent Communications
Can any of the company-specific risk be diversified away by investing in both T MOBILE 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 T MOBILE and Cogent Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between T MOBILE US and Cogent Communications Holdings, you can compare the effects of market volatilities on T MOBILE 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 T MOBILE with a short position of Cogent Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of T MOBILE and Cogent Communications.
Diversification Opportunities for T MOBILE and Cogent Communications
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between TM5 and Cogent is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding T MOBILE US and Cogent Communications Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogent Communications and T MOBILE 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 T MOBILE US 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 T MOBILE i.e., T MOBILE and Cogent Communications go up and down completely randomly.
Pair Corralation between T MOBILE and Cogent Communications
Assuming the 90 days trading horizon T MOBILE US is expected to under-perform the Cogent Communications. But the stock apears to be less risky and, when comparing its historical volatility, T MOBILE US is 1.08 times less risky than Cogent Communications. The stock trades about -0.04 of its potential returns per unit of risk. The Cogent Communications Holdings is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 7,307 in Cogent Communications Holdings on September 14, 2024 and sell it today you would lose (57.00) from holding Cogent Communications Holdings or give up 0.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
T MOBILE US vs. Cogent Communications Holdings
Performance |
| Timeline |
| T MOBILE US |
| Cogent Communications |
T MOBILE and Cogent Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with T MOBILE and Cogent Communications
The main advantage of trading using opposite T MOBILE and Cogent Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T MOBILE 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.The idea behind T MOBILE US and Cogent Communications Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |