Correlation Between Cognizant Technology and Big 5
Can any of the company-specific risk be diversified away by investing in both Cognizant Technology and Big 5 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 Big 5 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 Big 5 Sporting, you can compare the effects of market volatilities on Cognizant Technology and Big 5 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 Big 5. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognizant Technology and Big 5.
Diversification Opportunities for Cognizant Technology and Big 5
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cognizant and Big is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Cognizant Technology Solutions and Big 5 Sporting in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big 5 Sporting 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 Big 5. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big 5 Sporting has no effect on the direction of Cognizant Technology i.e., Cognizant Technology and Big 5 go up and down completely randomly.
Pair Corralation between Cognizant Technology and Big 5
Assuming the 90 days horizon Cognizant Technology Solutions is expected to generate 0.4 times more return on investment than Big 5. However, Cognizant Technology Solutions is 2.48 times less risky than Big 5. It trades about 0.12 of its potential returns per unit of risk. Big 5 Sporting is currently generating about -0.03 per unit of risk. If you would invest 6,994 in Cognizant Technology Solutions on September 13, 2024 and sell it today you would earn a total of 604.00 from holding Cognizant Technology Solutions or generate 8.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cognizant Technology Solutions vs. Big 5 Sporting
Performance |
| Timeline |
| Cognizant Technology |
| Big 5 Sporting |
Cognizant Technology and Big 5 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cognizant Technology and Big 5
The main advantage of trading using opposite Cognizant Technology and Big 5 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognizant Technology position performs unexpectedly, Big 5 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 Big 5 will offset losses from the drop in Big 5's long position.| Cognizant Technology vs. Superior Plus Corp | Cognizant Technology vs. SIVERS SEMICONDUCTORS AB | Cognizant Technology vs. Norsk Hydro ASA | Cognizant Technology vs. Reliance Steel Aluminum |
| Big 5 vs. Superior Plus Corp | Big 5 vs. SIVERS SEMICONDUCTORS AB | Big 5 vs. NorAm Drilling AS | Big 5 vs. Norsk Hydro ASA |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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