Correlation Between Cognizant Technology and Leidos Holdings
Can any of the company-specific risk be diversified away by investing in both Cognizant Technology and Leidos Holdings 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 Leidos Holdings 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 Leidos Holdings, you can compare the effects of market volatilities on Cognizant Technology and Leidos Holdings 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 Leidos Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognizant Technology and Leidos Holdings.
Diversification Opportunities for Cognizant Technology and Leidos Holdings
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cognizant and Leidos is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Cognizant Technology Solutions and Leidos Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leidos Holdings 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 Leidos Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leidos Holdings has no effect on the direction of Cognizant Technology i.e., Cognizant Technology and Leidos Holdings go up and down completely randomly.
Pair Corralation between Cognizant Technology and Leidos Holdings
Given the investment horizon of 90 days Cognizant Technology Solutions is expected to under-perform the Leidos Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Cognizant Technology Solutions is 1.14 times less risky than Leidos Holdings. The stock trades about -0.11 of its potential returns per unit of risk. The Leidos Holdings is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 14,320 in Leidos Holdings on October 20, 2024 and sell it today you would earn a total of 1,198 from holding Leidos Holdings or generate 8.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cognizant Technology Solutions vs. Leidos Holdings
Performance |
| Timeline |
| Cognizant Technology |
| Leidos Holdings |
Cognizant Technology and Leidos Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cognizant Technology and Leidos Holdings
The main advantage of trading using opposite Cognizant Technology and Leidos Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognizant Technology position performs unexpectedly, Leidos Holdings 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 Leidos Holdings will offset losses from the drop in Leidos Holdings' long position.| Cognizant Technology vs. Wipro Limited ADR | Cognizant Technology vs. Accenture plc | Cognizant Technology vs. Fiserv Inc | Cognizant Technology vs. Gartner |
| Leidos Holdings vs. CACI International | Leidos Holdings vs. Parsons Corp | Leidos Holdings vs. ASGN Inc | Leidos Holdings vs. ExlService Holdings |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios |