Correlation Between Cognyte Software and Arbitrum
Can any of the company-specific risk be diversified away by investing in both Cognyte Software and Arbitrum 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 Cognyte Software and Arbitrum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cognyte Software and Arbitrum, you can compare the effects of market volatilities on Cognyte Software and Arbitrum 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 Cognyte Software with a short position of Arbitrum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognyte Software and Arbitrum.
Diversification Opportunities for Cognyte Software and Arbitrum
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cognyte and Arbitrum is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Cognyte Software and Arbitrum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arbitrum and Cognyte Software 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 Cognyte Software are associated (or correlated) with Arbitrum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arbitrum has no effect on the direction of Cognyte Software i.e., Cognyte Software and Arbitrum go up and down completely randomly.
Pair Corralation between Cognyte Software and Arbitrum
Given the investment horizon of 90 days Cognyte Software is expected to under-perform the Arbitrum. But the stock apears to be less risky and, when comparing its historical volatility, Cognyte Software is 2.99 times less risky than Arbitrum. The stock trades about -0.66 of its potential returns per unit of risk. The Arbitrum is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 43.00 in Arbitrum on December 8, 2024 and sell it today you would lose (3.00) from holding Arbitrum or give up 6.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cognyte Software vs. Arbitrum
Performance |
| Timeline |
| Cognyte Software |
| Arbitrum |
Cognyte Software and Arbitrum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cognyte Software and Arbitrum
The main advantage of trading using opposite Cognyte Software and Arbitrum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognyte Software position performs unexpectedly, Arbitrum 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 Arbitrum will offset losses from the drop in Arbitrum's long position.| Cognyte Software vs. CSG Systems International | ||
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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