Correlation Between Cogeco Communications and Finning International
Can any of the company-specific risk be diversified away by investing in both Cogeco Communications and Finning International 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 Cogeco Communications and Finning International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cogeco Communications and Finning International, you can compare the effects of market volatilities on Cogeco Communications and Finning International 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 Cogeco Communications with a short position of Finning International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cogeco Communications and Finning International.
Diversification Opportunities for Cogeco Communications and Finning International
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cogeco and Finning is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Cogeco Communications and Finning International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finning International and Cogeco Communications 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 Cogeco Communications are associated (or correlated) with Finning International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Finning International has no effect on the direction of Cogeco Communications i.e., Cogeco Communications and Finning International go up and down completely randomly.
Pair Corralation between Cogeco Communications and Finning International
Assuming the 90 days trading horizon Cogeco Communications is expected to generate 0.6 times more return on investment than Finning International. However, Cogeco Communications is 1.68 times less risky than Finning International. It trades about 0.14 of its potential returns per unit of risk. Finning International is currently generating about -0.09 per unit of risk. If you would invest 6,903 in Cogeco Communications on September 5, 2024 and sell it today you would earn a total of 306.00 from holding Cogeco Communications or generate 4.43% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Cogeco Communications vs. Finning International
Performance |
Timeline |
Cogeco Communications |
Finning International |
Cogeco Communications and Finning International Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Cogeco Communications and Finning International
The main advantage of trading using opposite Cogeco Communications and Finning International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cogeco Communications position performs unexpectedly, Finning International 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 Finning International will offset losses from the drop in Finning International's long position.Cogeco Communications vs. GreenPower Motor | Cogeco Communications vs. Royal Helium | Cogeco Communications vs. Excelsior Mining Corp | Cogeco Communications vs. Vista Gold |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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