Correlation Between Cognizant Technology and Intermediate Capital
Can any of the company-specific risk be diversified away by investing in both Cognizant Technology and Intermediate Capital 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 Intermediate Capital 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 Intermediate Capital Group, you can compare the effects of market volatilities on Cognizant Technology and Intermediate Capital 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 Intermediate Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognizant Technology and Intermediate Capital.
Diversification Opportunities for Cognizant Technology and Intermediate Capital
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cognizant and Intermediate is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Cognizant Technology Solutions and Intermediate Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intermediate Capital 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 Intermediate Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intermediate Capital has no effect on the direction of Cognizant Technology i.e., Cognizant Technology and Intermediate Capital go up and down completely randomly.
Pair Corralation between Cognizant Technology and Intermediate Capital
Assuming the 90 days trading horizon Cognizant Technology is expected to generate 1.83 times less return on investment than Intermediate Capital. But when comparing it to its historical volatility, Cognizant Technology Solutions is 1.4 times less risky than Intermediate Capital. It trades about 0.06 of its potential returns per unit of risk. Intermediate Capital Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 130,888 in Intermediate Capital Group on November 9, 2024 and sell it today you would earn a total of 107,112 from holding Intermediate Capital Group or generate 81.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.19% |
| Values | Daily Returns |
Cognizant Technology Solutions vs. Intermediate Capital Group
Performance |
| Timeline |
| Cognizant Technology |
| Intermediate Capital |
Cognizant Technology and Intermediate Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cognizant Technology and Intermediate Capital
The main advantage of trading using opposite Cognizant Technology and Intermediate Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognizant Technology position performs unexpectedly, Intermediate Capital 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 Intermediate Capital will offset losses from the drop in Intermediate Capital's long position.| Cognizant Technology vs. Berkshire Hathaway | Cognizant Technology vs. Samsung Electronics Co | Cognizant Technology vs. Samsung Electronics Co | Cognizant Technology vs. Samsung Electronics Co |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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