Correlation Between CACI International and Cognizant Technology
Can any of the company-specific risk be diversified away by investing in both CACI International 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 CACI International and Cognizant Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CACI International and Cognizant Technology Solutions, you can compare the effects of market volatilities on CACI International 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 CACI International with a short position of Cognizant Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of CACI International and Cognizant Technology.
Diversification Opportunities for CACI International and Cognizant Technology
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CACI and Cognizant is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding CACI International and Cognizant Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cognizant Technology and CACI International 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 CACI International 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 CACI International i.e., CACI International and Cognizant Technology go up and down completely randomly.
Pair Corralation between CACI International and Cognizant Technology
Given the investment horizon of 90 days CACI International is expected to generate 1.13 times less return on investment than Cognizant Technology. In addition to that, CACI International is 1.11 times more volatile than Cognizant Technology Solutions. It trades about 0.05 of its total potential returns per unit of risk. Cognizant Technology Solutions is currently generating about 0.07 per unit of volatility. If you would invest 5,632 in Cognizant Technology Solutions on November 1, 2024 and sell it today you would earn a total of 2,644 from holding Cognizant Technology Solutions or generate 46.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CACI International vs. Cognizant Technology Solutions
Performance |
| Timeline |
| CACI International |
| Cognizant Technology |
CACI International and Cognizant Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CACI International and Cognizant Technology
The main advantage of trading using opposite CACI International and Cognizant Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CACI International 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.| CACI International vs. Leidos Holdings | CACI International vs. Parsons Corp | CACI International vs. ASGN Inc | CACI International vs. ExlService Holdings |
| Cognizant Technology vs. Wipro Limited ADR | Cognizant Technology vs. Accenture plc | Cognizant Technology vs. Gartner | Cognizant Technology vs. CACI International |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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