Correlation Between Cognizant Technology and Vitro SAB
Can any of the company-specific risk be diversified away by investing in both Cognizant Technology and Vitro SAB 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 Vitro SAB 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 Vitro SAB de, you can compare the effects of market volatilities on Cognizant Technology and Vitro SAB 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 Vitro SAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognizant Technology and Vitro SAB.
Diversification Opportunities for Cognizant Technology and Vitro SAB
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cognizant and Vitro is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Cognizant Technology Solutions and Vitro SAB de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vitro SAB de 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 Vitro SAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vitro SAB de has no effect on the direction of Cognizant Technology i.e., Cognizant Technology and Vitro SAB go up and down completely randomly.
Pair Corralation between Cognizant Technology and Vitro SAB
Assuming the 90 days trading horizon Cognizant Technology Solutions is expected to generate 0.45 times more return on investment than Vitro SAB. However, Cognizant Technology Solutions is 2.23 times less risky than Vitro SAB. It trades about 0.07 of its potential returns per unit of risk. Vitro SAB de is currently generating about -0.16 per unit of risk. If you would invest 115,737 in Cognizant Technology Solutions on September 4, 2024 and sell it today you would earn a total of 24,263 from holding Cognizant Technology Solutions or generate 20.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 93.5% |
| Values | Daily Returns |
Cognizant Technology Solutions vs. Vitro SAB de
Performance |
| Timeline |
| Cognizant Technology |
| Vitro SAB de |
Cognizant Technology and Vitro SAB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cognizant Technology and Vitro SAB
The main advantage of trading using opposite Cognizant Technology and Vitro SAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognizant Technology position performs unexpectedly, Vitro SAB 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 Vitro SAB will offset losses from the drop in Vitro SAB's long position.| Cognizant Technology vs. The Select Sector | Cognizant Technology vs. Promotora y Operadora | Cognizant Technology vs. SPDR Series Trust | Cognizant Technology vs. Vanguard World |
| Vitro SAB vs. Grupo Hotelero Santa | Vitro SAB vs. First Majestic Silver | Vitro SAB vs. Samsung Electronics Co | Vitro SAB vs. GMxico Transportes SAB |
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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