Correlation Between Cognizant Technology and FibraHotel
Can any of the company-specific risk be diversified away by investing in both Cognizant Technology and FibraHotel 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 FibraHotel 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 FibraHotel, you can compare the effects of market volatilities on Cognizant Technology and FibraHotel 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 FibraHotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognizant Technology and FibraHotel.
Diversification Opportunities for Cognizant Technology and FibraHotel
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cognizant and FibraHotel is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Cognizant Technology Solutions and FibraHotel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FibraHotel 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 FibraHotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FibraHotel has no effect on the direction of Cognizant Technology i.e., Cognizant Technology and FibraHotel go up and down completely randomly.
Pair Corralation between Cognizant Technology and FibraHotel
If you would invest 990.00 in FibraHotel on October 20, 2024 and sell it today you would lose (21.00) from holding FibraHotel or give up 2.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Cognizant Technology Solutions vs. FibraHotel
Performance |
| Timeline |
| Cognizant Technology |
| FibraHotel |
Cognizant Technology and FibraHotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cognizant Technology and FibraHotel
The main advantage of trading using opposite Cognizant Technology and FibraHotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognizant Technology position performs unexpectedly, FibraHotel 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 FibraHotel will offset losses from the drop in FibraHotel's long position.| Cognizant Technology vs. Prudential Financial | Cognizant Technology vs. Martin Marietta Materials | Cognizant Technology vs. Genworth Financial | Cognizant Technology vs. The Bank of |
| FibraHotel vs. The Home Depot | FibraHotel vs. KB Home | FibraHotel vs. Hoteles City Express | FibraHotel vs. Costco Wholesale |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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