Correlation Between Telus Corp and Cogent Communications
Can any of the company-specific risk be diversified away by investing in both Telus Corp 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 Telus Corp and Cogent Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telus Corp and Cogent Communications Group, you can compare the effects of market volatilities on Telus Corp 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 Telus Corp with a short position of Cogent Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telus Corp and Cogent Communications.
Diversification Opportunities for Telus Corp and Cogent Communications
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Telus and Cogent is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Telus Corp and Cogent Communications Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogent Communications and Telus Corp 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 Telus Corp 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 Telus Corp i.e., Telus Corp and Cogent Communications go up and down completely randomly.
Pair Corralation between Telus Corp and Cogent Communications
Allowing for the 90-day total investment horizon Telus Corp is expected to under-perform the Cogent Communications. But the stock apears to be less risky and, when comparing its historical volatility, Telus Corp is 1.75 times less risky than Cogent Communications. The stock trades about -0.02 of its potential returns per unit of risk. The Cogent Communications Group is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 5,425 in Cogent Communications Group on December 16, 2024 and sell it today you would earn a total of 1,427 from holding Cogent Communications Group or generate 26.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telus Corp vs. Cogent Communications Group
Performance |
| Timeline |
| Telus Corp |
| Cogent Communications |
Telus Corp and Cogent Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telus Corp and Cogent Communications
The main advantage of trading using opposite Telus Corp and Cogent Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telus Corp 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.| Telus Corp vs. Rogers 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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