Correlation Between Cogent Communications and IDT

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

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

Diversification Opportunities for Cogent Communications and IDT

-0.19

Correlation Coefficient

Cogent Communications  IDT

Good diversification

The 3 months correlation between Cogent and IDT is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Cogent Communications Group and IDT Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IDT Corporation and Cogent 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 Cogent Communications Group are associated (or correlated) with IDT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IDT Corporation has no effect on the direction of Cogent Communications i.e., Cogent Communications and IDT go up and down completely randomly.

Pair Corralation between Cogent Communications and IDT

Given the investment horizon of 90 days Cogent Communications Group is expected to under-perform the IDT. In addition to that, Cogent Communications is 1.07 times more volatile than IDT Corporation. It trades about -0.12 of its total potential returns per unit of risk. IDT Corporation is currently generating about 0.08 per unit of volatility. If you would invest  4,787  in IDT Corporation on December 27, 2024 and sell it today you would earn a total of  440.00  from holding IDT Corporation or generate 9.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Cogent Communications Group  vs.  IDT Corp.

Cogent Communications

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cogent Communications Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

IDT Corporation

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in IDT Corporation are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent fundamental indicators, IDT may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Cogent Communications and IDT

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

The idea behind Cogent Communications Group and IDT Corporation 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.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.