Correlation Between Cognizant Technology and AbbVie
Can any of the company-specific risk be diversified away by investing in both Cognizant Technology and AbbVie 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 AbbVie 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 AbbVie Inc, you can compare the effects of market volatilities on Cognizant Technology and AbbVie 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 AbbVie. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognizant Technology and AbbVie.
Diversification Opportunities for Cognizant Technology and AbbVie
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Cognizant and AbbVie is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Cognizant Technology Solutions and AbbVie Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AbbVie Inc 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 AbbVie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AbbVie Inc has no effect on the direction of Cognizant Technology i.e., Cognizant Technology and AbbVie go up and down completely randomly.
Pair Corralation between Cognizant Technology and AbbVie
Assuming the 90 days trading horizon Cognizant Technology Solutions is expected to generate 0.73 times more return on investment than AbbVie. However, Cognizant Technology Solutions is 1.36 times less risky than AbbVie. It trades about 0.07 of its potential returns per unit of risk. AbbVie Inc is currently generating about 0.04 per unit of risk. If you would invest 32,320 in Cognizant Technology Solutions on September 12, 2024 and sell it today you would earn a total of 11,013 from holding Cognizant Technology Solutions or generate 34.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 65.46% |
| Values | Daily Returns |
Cognizant Technology Solutions vs. AbbVie Inc
Performance |
| Timeline |
| Cognizant Technology |
| AbbVie Inc |
Cognizant Technology and AbbVie Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cognizant Technology and AbbVie
The main advantage of trading using opposite Cognizant Technology and AbbVie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognizant Technology position performs unexpectedly, AbbVie 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 AbbVie will offset losses from the drop in AbbVie's long position.| Cognizant Technology vs. Fidelity National Information | Cognizant Technology vs. Fundo Investimento Imobiliario | Cognizant Technology vs. LESTE FDO INV | Cognizant Technology vs. Fras le SA |
| AbbVie vs. CVS Health | AbbVie vs. GX AI TECH | AbbVie vs. Cognizant Technology Solutions | AbbVie vs. Extra Space Storage |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data |