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 and Cogent Communications Group, 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
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between TMUS and Cogent is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding T Mobile and Cogent Communications Group 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 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
Given the investment horizon of 90 days T Mobile is expected to generate 0.58 times more return on investment than Cogent Communications. However, T Mobile is 1.71 times less risky than Cogent Communications. It trades about 0.24 of its potential returns per unit of risk. Cogent Communications Group is currently generating about 0.05 per unit of risk. If you would invest 22,636 in T Mobile on August 26, 2024 and sell it today you would earn a total of 1,192 from holding T Mobile or generate 5.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
T Mobile vs. Cogent Communications Group
Performance |
| Timeline |
| T Mobile |
| 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.| T Mobile vs. ATT Inc | T Mobile vs. Comcast Corp | T Mobile vs. Lumen Technologies | T Mobile vs. Verizon Communications |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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