Correlation Between Cognizant Technology and Vulcan Materials
Can any of the company-specific risk be diversified away by investing in both Cognizant Technology and Vulcan Materials 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 Vulcan Materials 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 Vulcan Materials Co, you can compare the effects of market volatilities on Cognizant Technology and Vulcan Materials 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 Vulcan Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognizant Technology and Vulcan Materials.
Diversification Opportunities for Cognizant Technology and Vulcan Materials
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cognizant and Vulcan is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Cognizant Technology Solutions and Vulcan Materials Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vulcan Materials 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 Vulcan Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vulcan Materials has no effect on the direction of Cognizant Technology i.e., Cognizant Technology and Vulcan Materials go up and down completely randomly.
Pair Corralation between Cognizant Technology and Vulcan Materials
Assuming the 90 days trading horizon Cognizant Technology Solutions is expected to generate 0.94 times more return on investment than Vulcan Materials. However, Cognizant Technology Solutions is 1.07 times less risky than Vulcan Materials. It trades about 0.24 of its potential returns per unit of risk. Vulcan Materials Co is currently generating about 0.13 per unit of risk. If you would invest 7,390 in Cognizant Technology Solutions on September 2, 2024 and sell it today you would earn a total of 690.00 from holding Cognizant Technology Solutions or generate 9.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cognizant Technology Solutions vs. Vulcan Materials Co
Performance |
| Timeline |
| Cognizant Technology |
| Vulcan Materials |
Cognizant Technology and Vulcan Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cognizant Technology and Vulcan Materials
The main advantage of trading using opposite Cognizant Technology and Vulcan Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognizant Technology position performs unexpectedly, Vulcan Materials 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 Vulcan Materials will offset losses from the drop in Vulcan Materials' long position.| Cognizant Technology vs. Atalaya Mining | Cognizant Technology vs. Hochschild Mining plc | Cognizant Technology vs. Panther Metals PLC | Cognizant Technology vs. iShares Physical Silver |
| Vulcan Materials vs. Uniper SE | Vulcan Materials vs. Mulberry Group PLC | Vulcan Materials vs. London Security Plc | Vulcan Materials vs. Triad Group PLC |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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