Correlation Between United Internet and Cogent Communications
Can any of the company-specific risk be diversified away by investing in both United Internet 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 United Internet and Cogent Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Internet AG and Cogent Communications Holdings, you can compare the effects of market volatilities on United Internet 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 United Internet with a short position of Cogent Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Internet and Cogent Communications.
Diversification Opportunities for United Internet and Cogent Communications
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and Cogent is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding United Internet AG and Cogent Communications Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogent Communications and United Internet 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 United Internet AG 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 United Internet i.e., United Internet and Cogent Communications go up and down completely randomly.
Pair Corralation between United Internet and Cogent Communications
Assuming the 90 days trading horizon United Internet AG is expected to under-perform the Cogent Communications. In addition to that, United Internet is 1.15 times more volatile than Cogent Communications Holdings. It trades about -0.09 of its total potential returns per unit of risk. Cogent Communications Holdings is currently generating about 0.13 per unit of volatility. If you would invest 6,172 in Cogent Communications Holdings on September 12, 2024 and sell it today you would earn a total of 1,028 from holding Cogent Communications Holdings or generate 16.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Internet AG vs. Cogent Communications Holdings
Performance |
| Timeline |
| United Internet AG |
| Cogent Communications |
United Internet and Cogent Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Internet and Cogent Communications
The main advantage of trading using opposite United Internet and Cogent Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Internet 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.| United Internet vs. Superior Plus Corp | United Internet vs. SIVERS SEMICONDUCTORS AB | United Internet vs. Norsk Hydro ASA | United Internet vs. Reliance Steel Aluminum |
| 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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