Correlation Between Cognizant Technology and X FAB
Can any of the company-specific risk be diversified away by investing in both Cognizant Technology and X FAB 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 X FAB 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 X FAB Silicon Foundries, you can compare the effects of market volatilities on Cognizant Technology and X FAB 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 X FAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognizant Technology and X FAB.
Diversification Opportunities for Cognizant Technology and X FAB
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cognizant and 0ROZ is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Cognizant Technology Solutions and X FAB Silicon Foundries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X FAB Silicon 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 X FAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X FAB Silicon has no effect on the direction of Cognizant Technology i.e., Cognizant Technology and X FAB go up and down completely randomly.
Pair Corralation between Cognizant Technology and X FAB
Assuming the 90 days trading horizon Cognizant Technology Solutions is expected to generate 0.47 times more return on investment than X FAB. However, Cognizant Technology Solutions is 2.12 times less risky than X FAB. It trades about 0.18 of its potential returns per unit of risk. X FAB Silicon Foundries is currently generating about 0.05 per unit of risk. If you would invest 8,071 in Cognizant Technology Solutions on November 28, 2024 and sell it today you would earn a total of 401.00 from holding Cognizant Technology Solutions or generate 4.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cognizant Technology Solutions vs. X FAB Silicon Foundries
Performance |
| Timeline |
| Cognizant Technology |
| X FAB Silicon |
Cognizant Technology and X FAB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cognizant Technology and X FAB
The main advantage of trading using opposite Cognizant Technology and X FAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognizant Technology position performs unexpectedly, X FAB 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 X FAB will offset losses from the drop in X FAB's long position.| Cognizant Technology vs. Supermarket Income REIT | Cognizant Technology vs. Uber Technologies | Cognizant Technology vs. Vitec Software Group | Cognizant Technology vs. Software Circle plc |
| X FAB vs. BlackRock Frontiers Investment | X FAB vs. Mobius Investment Trust | X FAB vs. Lindsell Train Investment | X FAB vs. Livermore Investments 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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