Correlation Between Cognizant Technology and Hackett
Can any of the company-specific risk be diversified away by investing in both Cognizant Technology and Hackett 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 Hackett 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 The Hackett Group, you can compare the effects of market volatilities on Cognizant Technology and Hackett 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 Hackett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognizant Technology and Hackett.
Diversification Opportunities for Cognizant Technology and Hackett
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cognizant and Hackett is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Cognizant Technology Solutions and The Hackett Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hackett Group 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 Hackett. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hackett Group has no effect on the direction of Cognizant Technology i.e., Cognizant Technology and Hackett go up and down completely randomly.
Pair Corralation between Cognizant Technology and Hackett
Given the investment horizon of 90 days Cognizant Technology is expected to generate 1.16 times less return on investment than Hackett. But when comparing it to its historical volatility, Cognizant Technology Solutions is 1.34 times less risky than Hackett. It trades about 0.05 of its potential returns per unit of risk. The Hackett Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,231 in The Hackett Group on August 24, 2024 and sell it today you would earn a total of 865.00 from holding The Hackett Group or generate 38.77% 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. The Hackett Group
Performance |
| Timeline |
| Cognizant Technology |
| Hackett Group |
Cognizant Technology and Hackett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cognizant Technology and Hackett
The main advantage of trading using opposite Cognizant Technology and Hackett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognizant Technology position performs unexpectedly, Hackett 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 Hackett will offset losses from the drop in Hackett's long position.| Cognizant Technology vs. Wipro Limited ADR | Cognizant Technology vs. Accenture plc | Cognizant Technology vs. Gartner | Cognizant Technology vs. CACI International |
| Hackett vs. Concentrix | Hackett vs. Accenture plc | Hackett vs. International Business Machines | Hackett vs. Cognizant Technology Solutions |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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