Correlation Between Cognizant Technology and Ameriprise Financial
Can any of the company-specific risk be diversified away by investing in both Cognizant Technology and Ameriprise Financial 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 Ameriprise Financial 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 Ameriprise Financial, you can compare the effects of market volatilities on Cognizant Technology and Ameriprise Financial 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 Ameriprise Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognizant Technology and Ameriprise Financial.
Diversification Opportunities for Cognizant Technology and Ameriprise Financial
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cognizant and Ameriprise is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Cognizant Technology Solutions and Ameriprise Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameriprise Financial 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 Ameriprise Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ameriprise Financial has no effect on the direction of Cognizant Technology i.e., Cognizant Technology and Ameriprise Financial go up and down completely randomly.
Pair Corralation between Cognizant Technology and Ameriprise Financial
Assuming the 90 days trading horizon Cognizant Technology is expected to generate 8.37 times less return on investment than Ameriprise Financial. But when comparing it to its historical volatility, Cognizant Technology Solutions is 1.96 times less risky than Ameriprise Financial. It trades about 0.09 of its potential returns per unit of risk. Ameriprise Financial is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest 63,397 in Ameriprise Financial on August 30, 2024 and sell it today you would earn a total of 20,901 from holding Ameriprise Financial or generate 32.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cognizant Technology Solutions vs. Ameriprise Financial
Performance |
| Timeline |
| Cognizant Technology |
| Ameriprise Financial |
Cognizant Technology and Ameriprise Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cognizant Technology and Ameriprise Financial
The main advantage of trading using opposite Cognizant Technology and Ameriprise Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognizant Technology position performs unexpectedly, Ameriprise Financial 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 Ameriprise Financial will offset losses from the drop in Ameriprise Financial's long position.| Cognizant Technology vs. Fidelity National Information | Cognizant Technology vs. BTG Pactual Logstica | Cognizant Technology vs. Plano Plano Desenvolvimento | Cognizant Technology vs. The Procter Gamble |
| Ameriprise Financial vs. Bradespar SA | Ameriprise Financial vs. Bradespar SA | Ameriprise Financial vs. Habitat Ii |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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