Correlation Between Cognizant Technology and Live Nation
Can any of the company-specific risk be diversified away by investing in both Cognizant Technology and Live Nation 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 Live Nation 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 Live Nation Entertainment, you can compare the effects of market volatilities on Cognizant Technology and Live Nation 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 Live Nation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognizant Technology and Live Nation.
Diversification Opportunities for Cognizant Technology and Live Nation
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cognizant and Live is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Cognizant Technology Solutions and Live Nation Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Live Nation Entertainment 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 Live Nation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Live Nation Entertainment has no effect on the direction of Cognizant Technology i.e., Cognizant Technology and Live Nation go up and down completely randomly.
Pair Corralation between Cognizant Technology and Live Nation
Assuming the 90 days trading horizon Cognizant Technology is expected to generate 1.32 times less return on investment than Live Nation. But when comparing it to its historical volatility, Cognizant Technology Solutions is 1.18 times less risky than Live Nation. It trades about 0.46 of its potential returns per unit of risk. Live Nation Entertainment is currently generating about 0.52 of returns per unit of risk over similar time horizon. If you would invest 13,056 in Live Nation Entertainment on November 6, 2024 and sell it today you would earn a total of 1,423 from holding Live Nation Entertainment or generate 10.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cognizant Technology Solutions vs. Live Nation Entertainment
Performance |
| Timeline |
| Cognizant Technology |
| Live Nation Entertainment |
Cognizant Technology and Live Nation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cognizant Technology and Live Nation
The main advantage of trading using opposite Cognizant Technology and Live Nation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognizant Technology position performs unexpectedly, Live Nation 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 Live Nation will offset losses from the drop in Live Nation's long position.| Cognizant Technology vs. First Class Metals | Cognizant Technology vs. McEwen Mining | Cognizant Technology vs. Wheaton Precious Metals | Cognizant Technology vs. Dairy Farm International |
| Live Nation vs. Spotify Technology SA | Live Nation vs. Bytes Technology | Live Nation vs. Raymond James Financial | Live Nation vs. Take Two Interactive Software |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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