Correlation Between Cognizant Technology and United States
Can any of the company-specific risk be diversified away by investing in both Cognizant Technology and United States 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 United States 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 United States Steel, you can compare the effects of market volatilities on Cognizant Technology and United States 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 United States. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognizant Technology and United States.
Diversification Opportunities for Cognizant Technology and United States
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cognizant and United is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Cognizant Technology Solutions and United States Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Steel 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 United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Steel has no effect on the direction of Cognizant Technology i.e., Cognizant Technology and United States go up and down completely randomly.
Pair Corralation between Cognizant Technology and United States
Assuming the 90 days trading horizon Cognizant Technology is expected to generate 21.84 times less return on investment than United States. But when comparing it to its historical volatility, Cognizant Technology Solutions is 40.03 times less risky than United States. It trades about 0.22 of its potential returns per unit of risk. United States Steel is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 78,206 in United States Steel on August 24, 2024 and sell it today you would earn a total of 6,574 from holding United States Steel or generate 8.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cognizant Technology Solutions vs. United States Steel
Performance |
| Timeline |
| Cognizant Technology |
| United States Steel |
Cognizant Technology and United States Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cognizant Technology and United States
The main advantage of trading using opposite Cognizant Technology and United States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognizant Technology position performs unexpectedly, United States 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 United States will offset losses from the drop in United States' long position.| Cognizant Technology vs. Applied Materials | Cognizant Technology vs. Ameriprise Financial | Cognizant Technology vs. Verizon Communications | Cognizant Technology vs. McEwen Mining |
| United States vs. KB Home | United States vs. Martin Marietta Materials | United States vs. Southwest Airlines | United States vs. Monster Beverage Corp |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
Other Complementary Tools
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |