Correlation Between Bell Food and Cognizant Technology
Can any of the company-specific risk be diversified away by investing in both Bell Food and Cognizant Technology 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 Bell Food and Cognizant Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bell Food Group and Cognizant Technology Solutions, you can compare the effects of market volatilities on Bell Food and Cognizant Technology 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 Bell Food with a short position of Cognizant Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bell Food and Cognizant Technology.
Diversification Opportunities for Bell Food and Cognizant Technology
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Bell and Cognizant is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Bell Food Group and Cognizant Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cognizant Technology and Bell Food 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 Bell Food Group are associated (or correlated) with Cognizant Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cognizant Technology has no effect on the direction of Bell Food i.e., Bell Food and Cognizant Technology go up and down completely randomly.
Pair Corralation between Bell Food and Cognizant Technology
Assuming the 90 days trading horizon Bell Food Group is expected to under-perform the Cognizant Technology. But the stock apears to be less risky and, when comparing its historical volatility, Bell Food Group is 3.47 times less risky than Cognizant Technology. The stock trades about -0.04 of its potential returns per unit of risk. The Cognizant Technology Solutions is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 7,419 in Cognizant Technology Solutions on August 31, 2024 and sell it today you would earn a total of 604.00 from holding Cognizant Technology Solutions or generate 8.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Bell Food Group vs. Cognizant Technology Solutions
Performance |
| Timeline |
| Bell Food Group |
| Cognizant Technology |
Bell Food and Cognizant Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bell Food and Cognizant Technology
The main advantage of trading using opposite Bell Food and Cognizant Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bell Food position performs unexpectedly, Cognizant Technology 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 Cognizant Technology will offset losses from the drop in Cognizant Technology's long position.| Bell Food vs. Neometals | Bell Food vs. Coor Service Management | Bell Food vs. Aeorema Communications Plc | Bell Food vs. JLEN Environmental Assets |
| Cognizant Technology vs. Neometals | Cognizant Technology vs. Coor Service Management | Cognizant Technology vs. Aeorema Communications Plc | Cognizant Technology vs. JLEN Environmental Assets |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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