Correlation Between Cognizant Technology and LBG Media
Can any of the company-specific risk be diversified away by investing in both Cognizant Technology and LBG Media 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 LBG Media 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 LBG Media PLC, you can compare the effects of market volatilities on Cognizant Technology and LBG Media 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 LBG Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognizant Technology and LBG Media.
Diversification Opportunities for Cognizant Technology and LBG Media
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cognizant and LBG is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Cognizant Technology Solutions and LBG Media PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LBG Media PLC 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 LBG Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LBG Media PLC has no effect on the direction of Cognizant Technology i.e., Cognizant Technology and LBG Media go up and down completely randomly.
Pair Corralation between Cognizant Technology and LBG Media
Assuming the 90 days trading horizon Cognizant Technology Solutions is expected to generate 0.6 times more return on investment than LBG Media. However, Cognizant Technology Solutions is 1.66 times less risky than LBG Media. It trades about 0.09 of its potential returns per unit of risk. LBG Media PLC is currently generating about -0.21 per unit of risk. If you would invest 7,901 in Cognizant Technology Solutions on October 28, 2024 and sell it today you would earn a total of 127.00 from holding Cognizant Technology Solutions or generate 1.61% 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. LBG Media PLC
Performance |
| Timeline |
| Cognizant Technology |
| LBG Media PLC |
Cognizant Technology and LBG Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cognizant Technology and LBG Media
The main advantage of trading using opposite Cognizant Technology and LBG Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognizant Technology position performs unexpectedly, LBG Media 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 LBG Media will offset losses from the drop in LBG Media's long position.| Cognizant Technology vs. CleanTech Lithium plc | Cognizant Technology vs. Eastinco Mining Exploration | Cognizant Technology vs. Empire Metals Limited | Cognizant Technology vs. Impax Asset Management |
| LBG Media vs. Various Eateries PLC | LBG Media vs. Coeur Mining | LBG Media vs. Jacquet Metal Service | LBG Media vs. Lundin Mining Corp |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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