Correlation Between Cognizant Technology and Lindsell Train
Can any of the company-specific risk be diversified away by investing in both Cognizant Technology and Lindsell Train 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 Lindsell Train 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 Lindsell Train Investment, you can compare the effects of market volatilities on Cognizant Technology and Lindsell Train 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 Lindsell Train. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognizant Technology and Lindsell Train.
Diversification Opportunities for Cognizant Technology and Lindsell Train
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cognizant and Lindsell is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Cognizant Technology Solutions and Lindsell Train Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lindsell Train Investment 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 Lindsell Train. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lindsell Train Investment has no effect on the direction of Cognizant Technology i.e., Cognizant Technology and Lindsell Train go up and down completely randomly.
Pair Corralation between Cognizant Technology and Lindsell Train
Assuming the 90 days trading horizon Cognizant Technology Solutions is expected to under-perform the Lindsell Train. But the stock apears to be less risky and, when comparing its historical volatility, Cognizant Technology Solutions is 1.89 times less risky than Lindsell Train. The stock trades about -0.29 of its potential returns per unit of risk. The Lindsell Train Investment is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 74,800 in Lindsell Train Investment on October 11, 2024 and sell it today you would earn a total of 5,200 from holding Lindsell Train Investment or generate 6.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Cognizant Technology Solutions vs. Lindsell Train Investment
Performance |
| Timeline |
| Cognizant Technology |
| Lindsell Train Investment |
Cognizant Technology and Lindsell Train Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cognizant Technology and Lindsell Train
The main advantage of trading using opposite Cognizant Technology and Lindsell Train positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognizant Technology position performs unexpectedly, Lindsell Train 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 Lindsell Train will offset losses from the drop in Lindsell Train's long position.| Cognizant Technology vs. Charter Communications Cl | Cognizant Technology vs. Scandic Hotels Group | Cognizant Technology vs. United Airlines Holdings | Cognizant Technology vs. Melia Hotels |
| Lindsell Train vs. Atresmedia | Lindsell Train vs. mobilezone holding AG | Lindsell Train vs. Hollywood Bowl Group | Lindsell Train vs. Verizon Communications |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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