Correlation Between Cogent Communications and WisdomTree Investments

Can any of the company-specific risk be diversified away by investing in both Cogent Communications and WisdomTree Investments 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 WisdomTree Investments 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 WisdomTree Investments, you can compare the effects of market volatilities on Cogent Communications and WisdomTree Investments 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 WisdomTree Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cogent Communications and WisdomTree Investments.

Diversification Opportunities for Cogent Communications and WisdomTree Investments

-0.28

Correlation Coefficient

Cogent Communications  WisdomTree Investments

Very good diversification

The 3 months correlation between Cogent and WisdomTree is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Cogent Communications Holdings and WisdomTree Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Investments 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 WisdomTree Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Investments has no effect on the direction of Cogent Communications i.e., Cogent Communications and WisdomTree Investments go up and down completely randomly.

Pair Corralation between Cogent Communications and WisdomTree Investments

Assuming the 90 days trading horizon Cogent Communications Holdings is expected to under-perform the WisdomTree Investments. In addition to that, Cogent Communications is 1.27 times more volatile than WisdomTree Investments. It trades about -0.04 of its total potential returns per unit of risk. WisdomTree Investments is currently generating about 0.28 per unit of volatility. If you would invest  757.00  in WisdomTree Investments on April 25, 2025 and sell it today you would earn a total of  339.00  from holding WisdomTree Investments or generate 44.78% return on investment over 90 days.

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

Cogent Communications Holdings  vs.  WisdomTree Investments

Cogent Communications

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cogent Communications Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's primary indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

WisdomTree Investments

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Investments are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, WisdomTree Investments reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cogent Communications and WisdomTree Investments

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

The idea behind Cogent Communications Holdings and WisdomTree Investments 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.