Correlation Between Cognizant Technology and AbbVie
Can any of the company-specific risk be diversified away by investing in both Cognizant Technology and AbbVie 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 AbbVie 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 AbbVie Inc, you can compare the effects of market volatilities on Cognizant Technology and AbbVie 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 AbbVie. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognizant Technology and AbbVie.
Diversification Opportunities for Cognizant Technology and AbbVie
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cognizant and AbbVie is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Cognizant Technology Solutions and AbbVie Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AbbVie Inc 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 AbbVie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AbbVie Inc has no effect on the direction of Cognizant Technology i.e., Cognizant Technology and AbbVie go up and down completely randomly.
Pair Corralation between Cognizant Technology and AbbVie
If you would invest 140,000 in Cognizant Technology Solutions on October 31, 2024 and sell it today you would earn a total of 0.00 from holding Cognizant Technology Solutions or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Cognizant Technology Solutions vs. AbbVie Inc
Performance |
| Timeline |
| Cognizant Technology |
| AbbVie Inc |
Cognizant Technology and AbbVie Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cognizant Technology and AbbVie
The main advantage of trading using opposite Cognizant Technology and AbbVie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognizant Technology position performs unexpectedly, AbbVie 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 AbbVie will offset losses from the drop in AbbVie's long position.| Cognizant Technology vs. Monster Beverage Corp | Cognizant Technology vs. Grupo Sports World | Cognizant Technology vs. Prudential Financial | Cognizant Technology vs. FIBRA Storage |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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