Correlation Between Cognizant Technology and JB Hunt
Can any of the company-specific risk be diversified away by investing in both Cognizant Technology and JB Hunt 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 Cognizant Technology and JB Hunt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cognizant Technology Solutions and JB Hunt Transport, you can compare the effects of market volatilities on Cognizant Technology and JB Hunt 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 Cognizant Technology with a short position of JB Hunt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognizant Technology and JB Hunt.
Diversification Opportunities for Cognizant Technology and JB Hunt
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Cognizant and 0J71 is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Cognizant Technology Solutions and JB Hunt Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JB Hunt Transport and Cognizant Technology 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 Cognizant Technology Solutions are associated (or correlated) with JB Hunt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JB Hunt Transport has no effect on the direction of Cognizant Technology i.e., Cognizant Technology and JB Hunt go up and down completely randomly.
Pair Corralation between Cognizant Technology and JB Hunt
Assuming the 90 days trading horizon Cognizant Technology Solutions is expected to generate 0.45 times more return on investment than JB Hunt. However, Cognizant Technology Solutions is 2.22 times less risky than JB Hunt. It trades about 0.46 of its potential returns per unit of risk. JB Hunt Transport is currently generating about -0.05 per unit of risk. If you would invest 7,692 in Cognizant Technology Solutions on November 7, 2024 and sell it today you would earn a total of 665.00 from holding Cognizant Technology Solutions or generate 8.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 91.3% |
| Values | Daily Returns |
Cognizant Technology Solutions vs. JB Hunt Transport
Performance |
| Timeline |
| Cognizant Technology |
| JB Hunt Transport |
Cognizant Technology and JB Hunt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cognizant Technology and JB Hunt
The main advantage of trading using opposite Cognizant Technology and JB Hunt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognizant Technology position performs unexpectedly, JB Hunt 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 JB Hunt will offset losses from the drop in JB Hunt's long position.| Cognizant Technology vs. Infrastrutture Wireless Italiane | Cognizant Technology vs. Molson Coors Beverage | Cognizant Technology vs. Tyson Foods Cl | Cognizant Technology vs. LPKF Laser Electronics |
| JB Hunt vs. Check Point Software | JB Hunt vs. Premier Foods PLC | JB Hunt vs. Ecofin Global Utilities | JB Hunt vs. United Utilities Group |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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