Correlation Between Cognizant Technology and Global X
Can any of the company-specific risk be diversified away by investing in both Cognizant Technology and Global X 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 Global X 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 Global X Funds, you can compare the effects of market volatilities on Cognizant Technology and Global X 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 Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognizant Technology and Global X.
Diversification Opportunities for Cognizant Technology and Global X
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cognizant and Global is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Cognizant Technology Solutions and Global X Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Funds 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 Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Funds has no effect on the direction of Cognizant Technology i.e., Cognizant Technology and Global X go up and down completely randomly.
Pair Corralation between Cognizant Technology and Global X
Assuming the 90 days trading horizon Cognizant Technology Solutions is expected to generate 0.98 times more return on investment than Global X. However, Cognizant Technology Solutions is 1.02 times less risky than Global X. It trades about 0.13 of its potential returns per unit of risk. Global X Funds is currently generating about 0.07 per unit of risk. If you would invest 30,557 in Cognizant Technology Solutions on August 31, 2024 and sell it today you would earn a total of 12,776 from holding Cognizant Technology Solutions or generate 41.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 54.55% |
| Values | Daily Returns |
Cognizant Technology Solutions vs. Global X Funds
Performance |
| Timeline |
| Cognizant Technology |
| Global X Funds |
Cognizant Technology and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cognizant Technology and Global X
The main advantage of trading using opposite Cognizant Technology and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognizant Technology position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X's long position.| Cognizant Technology vs. Fiserv Inc | Cognizant Technology vs. Fidelity National Information | Cognizant Technology vs. Fras le SA | Cognizant Technology vs. Energisa SA |
| Global X vs. Fidelity National Information | Global X vs. Take Two Interactive Software | Global X vs. United Airlines Holdings | Global X vs. METISA Metalrgica Timboense |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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