Correlation Between Ross Stores and Cognizant Technology
Can any of the company-specific risk be diversified away by investing in both Ross Stores and Cognizant Technology 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 Ross Stores and Cognizant Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ross Stores and Cognizant Technology Solutions, you can compare the effects of market volatilities on Ross Stores and Cognizant Technology 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 Ross Stores with a short position of Cognizant Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ross Stores and Cognizant Technology.
Diversification Opportunities for Ross Stores and Cognizant Technology
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ross and Cognizant is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Ross Stores and Cognizant Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cognizant Technology and Ross Stores 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 Ross Stores are associated (or correlated) with Cognizant Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cognizant Technology has no effect on the direction of Ross Stores i.e., Ross Stores and Cognizant Technology go up and down completely randomly.
Pair Corralation between Ross Stores and Cognizant Technology
Assuming the 90 days trading horizon Ross Stores is expected to generate 0.97 times more return on investment than Cognizant Technology. However, Ross Stores is 1.03 times less risky than Cognizant Technology. It trades about 0.27 of its potential returns per unit of risk. Cognizant Technology Solutions is currently generating about 0.24 per unit of risk. If you would invest 14,085 in Ross Stores on September 2, 2024 and sell it today you would earn a total of 1,415 from holding Ross Stores or generate 10.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ross Stores vs. Cognizant Technology Solutions
Performance |
| Timeline |
| Ross Stores |
| Cognizant Technology |
Ross Stores and Cognizant Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ross Stores and Cognizant Technology
The main advantage of trading using opposite Ross Stores and Cognizant Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ross Stores position performs unexpectedly, Cognizant Technology 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 Cognizant Technology will offset losses from the drop in Cognizant Technology's long position.| Ross Stores vs. Uniper SE | Ross Stores vs. Mulberry Group PLC | Ross Stores vs. London Security Plc | Ross Stores vs. Triad Group PLC |
| Cognizant Technology vs. Atalaya Mining | Cognizant Technology vs. Hochschild Mining plc | Cognizant Technology vs. Panther Metals PLC | Cognizant Technology vs. iShares Physical Silver |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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