Correlation Between Cognizant Technology and InterContinental
Can any of the company-specific risk be diversified away by investing in both Cognizant Technology and InterContinental 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 InterContinental 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 InterContinental Hotels Group, you can compare the effects of market volatilities on Cognizant Technology and InterContinental 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 InterContinental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognizant Technology and InterContinental.
Diversification Opportunities for Cognizant Technology and InterContinental
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cognizant and InterContinental is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Cognizant Technology Solutions and InterContinental Hotels Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InterContinental Hotels 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 InterContinental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InterContinental Hotels has no effect on the direction of Cognizant Technology i.e., Cognizant Technology and InterContinental go up and down completely randomly.
Pair Corralation between Cognizant Technology and InterContinental
Assuming the 90 days trading horizon Cognizant Technology is expected to generate 4.48 times less return on investment than InterContinental. In addition to that, Cognizant Technology is 1.19 times more volatile than InterContinental Hotels Group. It trades about 0.07 of its total potential returns per unit of risk. InterContinental Hotels Group is currently generating about 0.37 per unit of volatility. If you would invest 749,480 in InterContinental Hotels Group on August 28, 2024 and sell it today you would earn a total of 230,520 from holding InterContinental Hotels Group or generate 30.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cognizant Technology Solutions vs. InterContinental Hotels Group
Performance |
| Timeline |
| Cognizant Technology |
| InterContinental Hotels |
Cognizant Technology and InterContinental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cognizant Technology and InterContinental
The main advantage of trading using opposite Cognizant Technology and InterContinental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognizant Technology position performs unexpectedly, InterContinental 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 InterContinental will offset losses from the drop in InterContinental's long position.| Cognizant Technology vs. Samsung Electronics Co | Cognizant Technology vs. Samsung Electronics Co | Cognizant Technology vs. Hyundai Motor | Cognizant Technology vs. Toyota Motor Corp |
| InterContinental vs. Chocoladefabriken Lindt Spruengli | InterContinental vs. National Atomic Co | InterContinental vs. OTP Bank Nyrt | InterContinental 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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