Correlation Between Cognizant Technology and Auckland International
Can any of the company-specific risk be diversified away by investing in both Cognizant Technology and Auckland International 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 Auckland International 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 Auckland International Airport, you can compare the effects of market volatilities on Cognizant Technology and Auckland International 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 Auckland International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognizant Technology and Auckland International.
Diversification Opportunities for Cognizant Technology and Auckland International
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cognizant and Auckland is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Cognizant Technology Solutions and Auckland International Airport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auckland International 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 Auckland International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auckland International has no effect on the direction of Cognizant Technology i.e., Cognizant Technology and Auckland International go up and down completely randomly.
Pair Corralation between Cognizant Technology and Auckland International
Assuming the 90 days horizon Cognizant Technology Solutions is expected to generate 1.0 times more return on investment than Auckland International. However, Cognizant Technology is 1.0 times more volatile than Auckland International Airport. It trades about 0.04 of its potential returns per unit of risk. Auckland International Airport is currently generating about 0.0 per unit of risk. If you would invest 5,980 in Cognizant Technology Solutions on October 24, 2024 and sell it today you would earn a total of 1,495 from holding Cognizant Technology Solutions or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Cognizant Technology Solutions vs. Auckland International Airport
Performance |
| Timeline |
| Cognizant Technology |
| Auckland International |
Cognizant Technology and Auckland International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cognizant Technology and Auckland International
The main advantage of trading using opposite Cognizant Technology and Auckland International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognizant Technology position performs unexpectedly, Auckland International 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 Auckland International will offset losses from the drop in Auckland International's long position.| Cognizant Technology vs. COFCO Joycome Foods | Cognizant Technology vs. Gruppo Mutuionline SpA | Cognizant Technology vs. CN MODERN DAIRY | Cognizant Technology vs. SENECA FOODS A |
| Auckland International vs. United States Steel | Auckland International vs. Cognizant Technology Solutions | Auckland International vs. Nippon Steel | Auckland International vs. Easy Software AG |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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