Correlation Between Cognizant Technology and Alaska Air
Can any of the company-specific risk be diversified away by investing in both Cognizant Technology and Alaska Air 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 Alaska Air 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 Alaska Air Group,, you can compare the effects of market volatilities on Cognizant Technology and Alaska Air 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 Alaska Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognizant Technology and Alaska Air.
Diversification Opportunities for Cognizant Technology and Alaska Air
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cognizant and Alaska is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Cognizant Technology Solutions and Alaska Air Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alaska Air 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 Alaska Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alaska Air Group, has no effect on the direction of Cognizant Technology i.e., Cognizant Technology and Alaska Air go up and down completely randomly.
Pair Corralation between Cognizant Technology and Alaska Air
Assuming the 90 days trading horizon Cognizant Technology is expected to generate 3.64 times less return on investment than Alaska Air. But when comparing it to its historical volatility, Cognizant Technology Solutions is 3.39 times less risky than Alaska Air. It trades about 0.12 of its potential returns per unit of risk. Alaska Air Group, is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 19,228 in Alaska Air Group, on October 12, 2024 and sell it today you would earn a total of 20,872 from holding Alaska Air Group, or generate 108.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 92.47% |
| Values | Daily Returns |
Cognizant Technology Solutions vs. Alaska Air Group,
Performance |
| Timeline |
| Cognizant Technology |
| Alaska Air Group, |
Cognizant Technology and Alaska Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cognizant Technology and Alaska Air
The main advantage of trading using opposite Cognizant Technology and Alaska Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognizant Technology position performs unexpectedly, Alaska Air 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 Alaska Air will offset losses from the drop in Alaska Air's long position.| Cognizant Technology vs. TechnipFMC plc | Cognizant Technology vs. Unity Software | Cognizant Technology vs. Pure Storage, | Cognizant Technology vs. Palantir Technologies |
| Alaska Air vs. Unity Software | Alaska Air vs. Check Point Software | Alaska Air vs. Cognizant Technology Solutions | Alaska Air vs. Zebra Technologies |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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