Correlation Between GreenPower and Cogeco Communications

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Can any of the company-specific risk be diversified away by investing in both GreenPower 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 GreenPower and Cogeco Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GreenPower Motor and Cogeco Communications, you can compare the effects of market volatilities on GreenPower 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 GreenPower with a short position of Cogeco Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of GreenPower and Cogeco Communications.

Diversification Opportunities for GreenPower and Cogeco Communications

-0.03
  Correlation Coefficient

Good diversification

The 3 months correlation between GreenPower and Cogeco is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding GreenPower Motor and Cogeco Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogeco Communications and GreenPower 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 GreenPower Motor 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 GreenPower i.e., GreenPower and Cogeco Communications go up and down completely randomly.

Pair Corralation between GreenPower and Cogeco Communications

Assuming the 90 days horizon GreenPower Motor is expected to generate 5.92 times more return on investment than Cogeco Communications. However, GreenPower is 5.92 times more volatile than Cogeco Communications. It trades about 0.05 of its potential returns per unit of risk. Cogeco Communications is currently generating about 0.18 per unit of risk. If you would invest  117.00  in GreenPower Motor on September 6, 2024 and sell it today you would earn a total of  9.00  from holding GreenPower Motor or generate 7.69% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

GreenPower Motor  vs.  Cogeco Communications

 Performance 
       Timeline  
GreenPower Motor 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in GreenPower Motor are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, GreenPower showed solid returns over the last few months and may actually be approaching a breakup point.
Cogeco Communications 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Cogeco Communications are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Cogeco Communications displayed solid returns over the last few months and may actually be approaching a breakup point.

GreenPower and Cogeco Communications Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GreenPower and Cogeco Communications

The main advantage of trading using opposite GreenPower and Cogeco Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GreenPower 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 GreenPower Motor 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

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