Correlation Between SMA Solar and Cognizant Technology
Can any of the company-specific risk be diversified away by investing in both SMA Solar 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 SMA Solar and Cognizant Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SMA Solar Technology and Cognizant Technology Solutions, you can compare the effects of market volatilities on SMA Solar 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 SMA Solar with a short position of Cognizant Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMA Solar and Cognizant Technology.
Diversification Opportunities for SMA Solar and Cognizant Technology
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SMA and Cognizant is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding SMA Solar Technology and Cognizant Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cognizant Technology and SMA Solar 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 SMA Solar Technology 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 SMA Solar i.e., SMA Solar and Cognizant Technology go up and down completely randomly.
Pair Corralation between SMA Solar and Cognizant Technology
Assuming the 90 days trading horizon SMA Solar Technology is expected to generate 3.98 times more return on investment than Cognizant Technology. However, SMA Solar is 3.98 times more volatile than Cognizant Technology Solutions. It trades about 0.02 of its potential returns per unit of risk. Cognizant Technology Solutions is currently generating about -0.29 per unit of risk. If you would invest 1,490 in SMA Solar Technology on October 11, 2024 and sell it today you would earn a total of 5.00 from holding SMA Solar Technology or generate 0.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
SMA Solar Technology vs. Cognizant Technology Solutions
Performance |
| Timeline |
| SMA Solar Technology |
| Cognizant Technology |
SMA Solar and Cognizant Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SMA Solar and Cognizant Technology
The main advantage of trading using opposite SMA Solar and Cognizant Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMA Solar 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.| SMA Solar vs. Synthomer plc | SMA Solar vs. Flow Traders NV | SMA Solar vs. Cellnex Telecom SA | SMA Solar vs. Morgan Advanced Materials |
| Cognizant Technology vs. Charter Communications Cl | Cognizant Technology vs. Scandic Hotels Group | Cognizant Technology vs. United Airlines Holdings | Cognizant Technology vs. Melia Hotels |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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