Correlation Between Cognizant Technology and Morgan Advanced
Can any of the company-specific risk be diversified away by investing in both Cognizant Technology and Morgan Advanced 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 Morgan Advanced 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 Morgan Advanced Materials, you can compare the effects of market volatilities on Cognizant Technology and Morgan Advanced 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 Morgan Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognizant Technology and Morgan Advanced.
Diversification Opportunities for Cognizant Technology and Morgan Advanced
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Cognizant and Morgan is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Cognizant Technology Solutions and Morgan Advanced Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Advanced Materials 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 Morgan Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morgan Advanced Materials has no effect on the direction of Cognizant Technology i.e., Cognizant Technology and Morgan Advanced go up and down completely randomly.
Pair Corralation between Cognizant Technology and Morgan Advanced
Assuming the 90 days trading horizon Cognizant Technology Solutions is expected to under-perform the Morgan Advanced. In addition to that, Cognizant Technology is 1.26 times more volatile than Morgan Advanced Materials. It trades about -0.04 of its total potential returns per unit of risk. Morgan Advanced Materials is currently generating about 0.38 per unit of volatility. If you would invest 24,800 in Morgan Advanced Materials on September 14, 2024 and sell it today you would earn a total of 2,200 from holding Morgan Advanced Materials or generate 8.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cognizant Technology Solutions vs. Morgan Advanced Materials
Performance |
| Timeline |
| Cognizant Technology |
| Morgan Advanced Materials |
Cognizant Technology and Morgan Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cognizant Technology and Morgan Advanced
The main advantage of trading using opposite Cognizant Technology and Morgan Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognizant Technology position performs unexpectedly, Morgan Advanced 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 Morgan Advanced will offset losses from the drop in Morgan Advanced's long position.| Cognizant Technology vs. Zoom Video Communications | Cognizant Technology vs. Zegona Communications Plc | Cognizant Technology vs. AMG Advanced Metallurgical | Cognizant Technology vs. Empire Metals Limited |
| Morgan Advanced vs. Polar Capital Technology | Morgan Advanced vs. National Beverage Corp | Morgan Advanced vs. Cognizant Technology Solutions | Morgan Advanced vs. Scandinavian Tobacco 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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