Correlation Between Cognizant Technology and Check Point
Can any of the company-specific risk be diversified away by investing in both Cognizant Technology and Check Point 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 Check Point 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 Check Point Software, you can compare the effects of market volatilities on Cognizant Technology and Check Point 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 Check Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognizant Technology and Check Point.
Diversification Opportunities for Cognizant Technology and Check Point
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cognizant and Check is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Cognizant Technology Solutions and Check Point Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Check Point Software 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 Check Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Check Point Software has no effect on the direction of Cognizant Technology i.e., Cognizant Technology and Check Point go up and down completely randomly.
Pair Corralation between Cognizant Technology and Check Point
Assuming the 90 days trading horizon Cognizant Technology is expected to generate 1.79 times less return on investment than Check Point. But when comparing it to its historical volatility, Cognizant Technology Solutions is 1.19 times less risky than Check Point. It trades about 0.04 of its potential returns per unit of risk. Check Point Software is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 14,640 in Check Point Software on August 24, 2024 and sell it today you would earn a total of 3,540 from holding Check Point Software or generate 24.18% 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. Check Point Software
Performance |
| Timeline |
| Cognizant Technology |
| Check Point Software |
Cognizant Technology and Check Point Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cognizant Technology and Check Point
The main advantage of trading using opposite Cognizant Technology and Check Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognizant Technology position performs unexpectedly, Check Point 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 Check Point will offset losses from the drop in Check Point's long position.| Cognizant Technology vs. Everyman Media Group | Cognizant Technology vs. Hollywood Bowl Group | Cognizant Technology vs. Young Cos Brewery | Cognizant Technology vs. SBM Offshore NV |
| Check Point vs. Toyota Motor Corp | Check Point vs. SoftBank Group Corp | Check Point vs. OTP Bank Nyrt | Check Point vs. Yum Brands |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |