Correlation Between Cogent Communications and Mastercard

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

Diversification Opportunities for Cogent Communications and Mastercard

-0.17

Correlation Coefficient

Cogent Communications  Mastercard

Good diversification

The 3 months correlation between Cogent and Mastercard is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Cogent Communications Holdings and Mastercard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mastercard 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 Mastercard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mastercard has no effect on the direction of Cogent Communications i.e., Cogent Communications and Mastercard go up and down completely randomly.

Pair Corralation between Cogent Communications and Mastercard

Assuming the 90 days trading horizon Cogent Communications Holdings is expected to generate 1.73 times more return on investment than Mastercard. However, Cogent Communications is 1.73 times more volatile than Mastercard. It trades about 0.02 of its potential returns per unit of risk. Mastercard is currently generating about 0.01 per unit of risk. If you would invest  4,419  in Cogent Communications Holdings on April 23, 2025 and sell it today you would earn a total of  61.00  from holding Cogent Communications Holdings or generate 1.38% 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.  Mastercard

Cogent Communications

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cogent Communications Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable primary indicators, Cogent Communications is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Mastercard

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mastercard are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Mastercard is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Cogent Communications and Mastercard

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

The idea behind Cogent Communications Holdings and Mastercard 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.