Correlation Between Cognizant Technology and Neometals
Can any of the company-specific risk be diversified away by investing in both Cognizant Technology and Neometals 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 Neometals 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 Neometals, you can compare the effects of market volatilities on Cognizant Technology and Neometals 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 Neometals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognizant Technology and Neometals.
Diversification Opportunities for Cognizant Technology and Neometals
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cognizant and Neometals is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Cognizant Technology Solutions and Neometals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neometals 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 Neometals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neometals has no effect on the direction of Cognizant Technology i.e., Cognizant Technology and Neometals go up and down completely randomly.
Pair Corralation between Cognizant Technology and Neometals
Assuming the 90 days trading horizon Cognizant Technology Solutions is expected to generate 1.71 times more return on investment than Neometals. However, Cognizant Technology is 1.71 times more volatile than Neometals. It trades about 0.19 of its potential returns per unit of risk. Neometals is currently generating about -0.21 per unit of risk. If you would invest 7,479 in Cognizant Technology Solutions on August 29, 2024 and sell it today you would earn a total of 588.00 from holding Cognizant Technology Solutions or generate 7.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Cognizant Technology Solutions vs. Neometals
Performance |
| Timeline |
| Cognizant Technology |
| Neometals |
Cognizant Technology and Neometals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cognizant Technology and Neometals
The main advantage of trading using opposite Cognizant Technology and Neometals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognizant Technology position performs unexpectedly, Neometals 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 Neometals will offset losses from the drop in Neometals' long position.| Cognizant Technology vs. Lendinvest PLC | Cognizant Technology vs. Neometals | Cognizant Technology vs. Coor Service Management | Cognizant Technology vs. Albion Technology General |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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