Correlation Between Air Lease and Cogent Communications
Can any of the company-specific risk be diversified away by investing in both Air Lease 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 Air Lease and Cogent Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Lease and Cogent Communications Holdings, you can compare the effects of market volatilities on Air Lease 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 Air Lease with a short position of Cogent Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Lease and Cogent Communications.
Diversification Opportunities for Air Lease and Cogent Communications
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Air and Cogent is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and Cogent Communications Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogent Communications and Air Lease 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 Air Lease 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 Air Lease i.e., Air Lease and Cogent Communications go up and down completely randomly.
Pair Corralation between Air Lease and Cogent Communications
Assuming the 90 days trading horizon Air Lease is expected to generate 0.94 times more return on investment than Cogent Communications. However, Air Lease is 1.06 times less risky than Cogent Communications. It trades about 0.09 of its potential returns per unit of risk. Cogent Communications Holdings is currently generating about -0.03 per unit of risk. If you would invest 4,559 in Air Lease on September 16, 2024 and sell it today you would earn a total of 121.00 from holding Air Lease or generate 2.65% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 95.45% |
Values | Daily Returns |
Air Lease vs. Cogent Communications Holdings
Performance |
Timeline |
Air Lease |
Cogent Communications |
Air Lease and Cogent Communications Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Air Lease and Cogent Communications
The main advantage of trading using opposite Air Lease and Cogent Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Lease 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.Air Lease vs. United Rentals | Air Lease vs. Superior Plus Corp | Air Lease vs. SIVERS SEMICONDUCTORS AB | Air Lease vs. Norsk Hydro ASA |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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