Correlation Between Cogent Communications and RENTOKIL INITIAL
Can any of the company-specific risk be diversified away by investing in both Cogent Communications and RENTOKIL INITIAL 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 RENTOKIL INITIAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cogent Communications Holdings and RENTOKIL INITIAL ADR5, you can compare the effects of market volatilities on Cogent Communications and RENTOKIL INITIAL 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 RENTOKIL INITIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cogent Communications and RENTOKIL INITIAL.
Diversification Opportunities for Cogent Communications and RENTOKIL INITIAL
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Cogent and RENTOKIL is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Cogent Communications Holdings and RENTOKIL INITIAL ADR5 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RENTOKIL INITIAL ADR5 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 Holdings are associated (or correlated) with RENTOKIL INITIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RENTOKIL INITIAL ADR5 has no effect on the direction of Cogent Communications i.e., Cogent Communications and RENTOKIL INITIAL go up and down completely randomly.
Pair Corralation between Cogent Communications and RENTOKIL INITIAL
Assuming the 90 days trading horizon Cogent Communications Holdings is expected to generate 0.53 times more return on investment than RENTOKIL INITIAL. However, Cogent Communications Holdings is 1.87 times less risky than RENTOKIL INITIAL. It trades about -0.08 of its potential returns per unit of risk. RENTOKIL INITIAL ADR5 is currently generating about -0.08 per unit of risk. If you would invest 7,150 in Cogent Communications Holdings on October 22, 2024 and sell it today you would lose (150.00) from holding Cogent Communications Holdings or give up 2.1% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Cogent Communications Holdings vs. RENTOKIL INITIAL ADR5
Performance |
Timeline |
Cogent Communications |
RENTOKIL INITIAL ADR5 |
Cogent Communications and RENTOKIL INITIAL Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Cogent Communications and RENTOKIL INITIAL
The main advantage of trading using opposite Cogent Communications and RENTOKIL INITIAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cogent Communications position performs unexpectedly, RENTOKIL INITIAL 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 RENTOKIL INITIAL will offset losses from the drop in RENTOKIL INITIAL's long position.Cogent Communications vs. MHP Hotel AG | Cogent Communications vs. HYATT HOTELS A | Cogent Communications vs. Zoom Video Communications | Cogent Communications vs. InterContinental Hotels Group |
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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