Correlation Between Senvest Capital and Cogeco Communications

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

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

Diversification Opportunities for Senvest Capital and Cogeco Communications

-0.54

Correlation Coefficient

Senvest Capital  Cogeco Communications

Excellent diversification

The 3 months correlation between Senvest and Cogeco is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Senvest Capital and Cogeco Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogeco Communications and Senvest Capital 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 Senvest Capital 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 Senvest Capital i.e., Senvest Capital and Cogeco Communications go up and down completely randomly.

Pair Corralation between Senvest Capital and Cogeco Communications

Assuming the 90 days trading horizon Senvest Capital is expected to generate 2.73 times less return on investment than Cogeco Communications. But when comparing it to its historical volatility, Senvest Capital is 2.22 times less risky than Cogeco Communications. It trades about 0.11 of its potential returns per unit of risk. Cogeco Communications is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  6,330  in Cogeco Communications on September 3, 2024 and sell it today you would earn a total of  670.00  from holding Cogeco Communications or generate 10.58% return on investment over 90 days.

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

Senvest Capital  vs.  Cogeco Communications

Senvest Capital

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Senvest Capital are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Senvest Capital is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Cogeco Communications

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cogeco Communications are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Cogeco Communications may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Senvest Capital and Cogeco Communications

The main advantage of trading using opposite Senvest Capital and Cogeco Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Senvest Capital 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 Senvest Capital 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.