Correlation Between Cognizant Technology and Workspace Group
Can any of the company-specific risk be diversified away by investing in both Cognizant Technology and Workspace Group 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 Workspace Group 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 Workspace Group PLC, you can compare the effects of market volatilities on Cognizant Technology and Workspace Group 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 Workspace Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognizant Technology and Workspace Group.
Diversification Opportunities for Cognizant Technology and Workspace Group
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cognizant and Workspace is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Cognizant Technology Solutions and Workspace Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Workspace Group 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 Workspace Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Workspace Group PLC has no effect on the direction of Cognizant Technology i.e., Cognizant Technology and Workspace Group go up and down completely randomly.
Pair Corralation between Cognizant Technology and Workspace Group
Assuming the 90 days trading horizon Cognizant Technology Solutions is expected to generate 0.75 times more return on investment than Workspace Group. However, Cognizant Technology Solutions is 1.33 times less risky than Workspace Group. It trades about 0.04 of its potential returns per unit of risk. Workspace Group PLC is currently generating about 0.01 per unit of risk. If you would invest 6,167 in Cognizant Technology Solutions on October 13, 2024 and sell it today you would earn a total of 1,408 from holding Cognizant Technology Solutions or generate 22.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Cognizant Technology Solutions vs. Workspace Group PLC
Performance |
| Timeline |
| Cognizant Technology |
| Workspace Group PLC |
Cognizant Technology and Workspace Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cognizant Technology and Workspace Group
The main advantage of trading using opposite Cognizant Technology and Workspace Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognizant Technology position performs unexpectedly, Workspace Group 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 Workspace Group will offset losses from the drop in Workspace Group's long position.| Cognizant Technology vs. Playtech Plc | Cognizant Technology vs. JD Sports Fashion | Cognizant Technology vs. Seche Environnement SA | Cognizant Technology vs. Zoom Video Communications |
| Workspace Group vs. Trainline Plc | Workspace Group vs. Vitec Software Group | Workspace Group vs. Cognizant Technology Solutions | Workspace Group vs. EVS Broadcast Equipment |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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