Correlation Between Cognizant Technology and Future Metals
Can any of the company-specific risk be diversified away by investing in both Cognizant Technology and Future 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 Future 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 Future Metals NL, you can compare the effects of market volatilities on Cognizant Technology and Future 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 Future Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognizant Technology and Future Metals.
Diversification Opportunities for Cognizant Technology and Future Metals
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cognizant and Future is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Cognizant Technology Solutions and Future Metals NL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Future Metals NL 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 Future Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Future Metals NL has no effect on the direction of Cognizant Technology i.e., Cognizant Technology and Future Metals go up and down completely randomly.
Pair Corralation between Cognizant Technology and Future Metals
Assuming the 90 days trading horizon Cognizant Technology Solutions is expected to generate 0.35 times more return on investment than Future Metals. However, Cognizant Technology Solutions is 2.84 times less risky than Future Metals. It trades about -0.3 of its potential returns per unit of risk. Future Metals NL is currently generating about -0.41 per unit of risk. If you would invest 8,090 in Cognizant Technology Solutions on October 13, 2024 and sell it today you would lose (515.00) from holding Cognizant Technology Solutions or give up 6.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Cognizant Technology Solutions vs. Future Metals NL
Performance |
| Timeline |
| Cognizant Technology |
| Future Metals NL |
Cognizant Technology and Future Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cognizant Technology and Future Metals
The main advantage of trading using opposite Cognizant Technology and Future Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognizant Technology position performs unexpectedly, Future 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 Future Metals will offset losses from the drop in Future Metals' long position.| Cognizant Technology vs. Travel Leisure Co | Cognizant Technology vs. Atalaya Mining | Cognizant Technology vs. Science in Sport | Cognizant Technology vs. Cornish Metals |
| Future Metals vs. Polar Capital Technology | Future Metals vs. Bankers Investment Trust | Future Metals vs. Cognizant Technology Solutions | Future Metals vs. Auction Technology 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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