Correlation Between Cognyte Software and Aptiv PLC
Can any of the company-specific risk be diversified away by investing in both Cognyte Software and Aptiv PLC 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 Aptiv PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cognyte Software and Aptiv PLC, you can compare the effects of market volatilities on Cognyte Software and Aptiv PLC 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 Aptiv PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognyte Software and Aptiv PLC.
Diversification Opportunities for Cognyte Software and Aptiv PLC
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cognyte and Aptiv is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Cognyte Software and Aptiv PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aptiv PLC 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 Aptiv PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aptiv PLC has no effect on the direction of Cognyte Software i.e., Cognyte Software and Aptiv PLC go up and down completely randomly.
Pair Corralation between Cognyte Software and Aptiv PLC
Given the investment horizon of 90 days Cognyte Software is expected to generate 1.5 times more return on investment than Aptiv PLC. However, Cognyte Software is 1.5 times more volatile than Aptiv PLC. It trades about 0.08 of its potential returns per unit of risk. Aptiv PLC is currently generating about -0.03 per unit of risk. If you would invest 329.00 in Cognyte Software on December 2, 2024 and sell it today you would earn a total of 564.00 from holding Cognyte Software or generate 171.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.39% |
| Values | Daily Returns |
Cognyte Software vs. Aptiv PLC
Performance |
| Timeline |
| Cognyte Software |
| Aptiv PLC |
Risk-Adjusted Performance
Solid
Weak | Strong |
Cognyte Software and Aptiv PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cognyte Software and Aptiv PLC
The main advantage of trading using opposite Cognyte Software and Aptiv PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognyte Software position performs unexpectedly, Aptiv PLC 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 Aptiv PLC will offset losses from the drop in Aptiv PLC'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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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