Correlation Between Cognizant Technology and European Metals
Can any of the company-specific risk be diversified away by investing in both Cognizant Technology and European Metals 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 European Metals 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 European Metals Holdings, you can compare the effects of market volatilities on Cognizant Technology and European Metals 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 European Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognizant Technology and European Metals.
Diversification Opportunities for Cognizant Technology and European Metals
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cognizant and European is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Cognizant Technology Solutions and European Metals Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on European Metals Holdings 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 European Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of European Metals Holdings has no effect on the direction of Cognizant Technology i.e., Cognizant Technology and European Metals go up and down completely randomly.
Pair Corralation between Cognizant Technology and European Metals
Assuming the 90 days trading horizon Cognizant Technology Solutions is expected to generate 0.36 times more return on investment than European Metals. However, Cognizant Technology Solutions is 2.75 times less risky than European Metals. It trades about 0.25 of its potential returns per unit of risk. European Metals Holdings is currently generating about -0.23 per unit of risk. If you would invest 7,640 in Cognizant Technology Solutions on September 20, 2024 and sell it today you would earn a total of 399.00 from holding Cognizant Technology Solutions or generate 5.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cognizant Technology Solutions vs. European Metals Holdings
Performance |
| Timeline |
| Cognizant Technology |
| European Metals Holdings |
Cognizant Technology and European Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cognizant Technology and European Metals
The main advantage of trading using opposite Cognizant Technology and European Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognizant Technology position performs unexpectedly, European Metals 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 European Metals will offset losses from the drop in European Metals' long position.| Cognizant Technology vs. European Metals Holdings | Cognizant Technology vs. GreenX Metals | Cognizant Technology vs. Gaming Realms plc | Cognizant Technology vs. Compagnie Plastic Omnium |
| European Metals vs. Waste Management | European Metals vs. Naturhouse Health SA | European Metals vs. Cardinal Health | European Metals vs. Planet Fitness Cl |
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 Stocks Directory module to find actively traded stocks across global markets.
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