Correlation Between Cognizant Technology and CDW
Can any of the company-specific risk be diversified away by investing in both Cognizant Technology and CDW 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 CDW 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 CDW Corporation, you can compare the effects of market volatilities on Cognizant Technology and CDW 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 CDW. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognizant Technology and CDW.
Diversification Opportunities for Cognizant Technology and CDW
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cognizant and CDW is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Cognizant Technology Solutions and CDW Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDW Corporation 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 CDW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDW Corporation has no effect on the direction of Cognizant Technology i.e., Cognizant Technology and CDW go up and down completely randomly.
Pair Corralation between Cognizant Technology and CDW
Assuming the 90 days horizon Cognizant Technology Solutions is expected to generate 0.65 times more return on investment than CDW. However, Cognizant Technology Solutions is 1.55 times less risky than CDW. It trades about 0.19 of its potential returns per unit of risk. CDW Corporation is currently generating about -0.21 per unit of risk. If you would invest 6,899 in Cognizant Technology Solutions on August 27, 2024 and sell it today you would earn a total of 601.00 from holding Cognizant Technology Solutions or generate 8.71% 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. CDW Corp.
Performance |
| Timeline |
| Cognizant Technology |
| CDW Corporation |
Cognizant Technology and CDW Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cognizant Technology and CDW
The main advantage of trading using opposite Cognizant Technology and CDW positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognizant Technology position performs unexpectedly, CDW 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 CDW will offset losses from the drop in CDW's long position.| Cognizant Technology vs. Accenture plc | Cognizant Technology vs. Superior Plus Corp | Cognizant Technology vs. NMI Holdings | Cognizant Technology vs. Origin Agritech |
| CDW vs. Accenture plc | CDW vs. Cognizant Technology Solutions | CDW vs. Superior Plus Corp | CDW vs. NMI Holdings |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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