Correlation Between Boat Rocker and Cogeco Communications

Can any of the company-specific risk be diversified away by investing in both Boat Rocker and Cogeco 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 Boat Rocker and Cogeco Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Boat Rocker Media and Cogeco Communications, you can compare the effects of market volatilities on Boat Rocker and Cogeco 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 Boat Rocker with a short position of Cogeco Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boat Rocker and Cogeco Communications.

Diversification Opportunities for Boat Rocker and Cogeco Communications

-0.65

Correlation Coefficient

Boat Rocker  Cogeco Communications

Excellent diversification

The 3 months correlation between Boat and Cogeco is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Boat Rocker Media and Cogeco Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogeco Communications and Boat Rocker 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 Boat Rocker Media are associated (or correlated) with Cogeco Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cogeco Communications has no effect on the direction of Boat Rocker i.e., Boat Rocker and Cogeco Communications go up and down completely randomly.

Pair Corralation between Boat Rocker and Cogeco Communications

Assuming the 90 days trading horizon Boat Rocker Media is expected to generate 2.12 times more return on investment than Cogeco Communications. However, Boat Rocker is 2.12 times more volatile than Cogeco Communications. It trades about 0.06 of its potential returns per unit of risk. Cogeco Communications is currently generating about 0.02 per unit of risk. If you would invest  65.00  in Boat Rocker Media on November 27, 2024 and sell it today you would earn a total of  7.00  from holding Boat Rocker Media or generate 10.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Boat Rocker Media  vs.  Cogeco Communications

Boat Rocker Media

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Boat Rocker Media are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Boat Rocker displayed solid returns over the last few months and may actually be approaching a breakup point.

Cogeco Communications

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cogeco Communications are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Cogeco Communications is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Boat Rocker and Cogeco Communications

The main advantage of trading using opposite Boat Rocker and Cogeco Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boat Rocker position performs unexpectedly, Cogeco 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 Cogeco Communications will offset losses from the drop in Cogeco Communications' long position.

The idea behind Boat Rocker Media and Cogeco Communications 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.

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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 CEOs Directory module to screen CEOs from public companies around the world.