Correlation Between Cognizant Technology and Credit Acceptance
Can any of the company-specific risk be diversified away by investing in both Cognizant Technology and Credit Acceptance 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 Credit Acceptance 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 Credit Acceptance, you can compare the effects of market volatilities on Cognizant Technology and Credit Acceptance 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 Credit Acceptance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognizant Technology and Credit Acceptance.
Diversification Opportunities for Cognizant Technology and Credit Acceptance
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Cognizant and Credit is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Cognizant Technology Solutions and Credit Acceptance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credit Acceptance 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 Credit Acceptance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Credit Acceptance has no effect on the direction of Cognizant Technology i.e., Cognizant Technology and Credit Acceptance go up and down completely randomly.
Pair Corralation between Cognizant Technology and Credit Acceptance
If you would invest 42,900 in Cognizant Technology Solutions on September 12, 2024 and sell it today you would earn a total of 433.00 from holding Cognizant Technology Solutions or generate 1.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cognizant Technology Solutions vs. Credit Acceptance
Performance |
| Timeline |
| Cognizant Technology |
| Credit Acceptance |
Cognizant Technology and Credit Acceptance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cognizant Technology and Credit Acceptance
The main advantage of trading using opposite Cognizant Technology and Credit Acceptance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognizant Technology position performs unexpectedly, Credit Acceptance 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 Credit Acceptance will offset losses from the drop in Credit Acceptance's long position.| Cognizant Technology vs. Bio Techne | Cognizant Technology vs. Technos SA | Cognizant Technology vs. Micron Technology | Cognizant Technology vs. Marvell Technology |
| Credit Acceptance vs. PayPal Holdings | Credit Acceptance vs. Capital One Financial | Credit Acceptance vs. Bread Financial Holdings | Credit Acceptance vs. Financeira Alfa SA |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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