Correlation Between Cognizant Technology and Citigroup
Can any of the company-specific risk be diversified away by investing in both Cognizant Technology and Citigroup 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 Citigroup 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 Citigroup, you can compare the effects of market volatilities on Cognizant Technology and Citigroup 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 Citigroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognizant Technology and Citigroup.
Diversification Opportunities for Cognizant Technology and Citigroup
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cognizant and Citigroup is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Cognizant Technology Solutions and Citigroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citigroup 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 Citigroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citigroup has no effect on the direction of Cognizant Technology i.e., Cognizant Technology and Citigroup go up and down completely randomly.
Pair Corralation between Cognizant Technology and Citigroup
Assuming the 90 days trading horizon Cognizant Technology is expected to generate 26.56 times less return on investment than Citigroup. But when comparing it to its historical volatility, Cognizant Technology Solutions is 18.26 times less risky than Citigroup. It trades about 0.22 of its potential returns per unit of risk. Citigroup is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 6,680 in Citigroup on September 14, 2024 and sell it today you would earn a total of 506.00 from holding Citigroup or generate 7.57% 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. Citigroup
Performance |
| Timeline |
| Cognizant Technology |
| Citigroup |
Cognizant Technology and Citigroup Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cognizant Technology and Citigroup
The main advantage of trading using opposite Cognizant Technology and Citigroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognizant Technology position performs unexpectedly, Citigroup 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 Citigroup will offset losses from the drop in Citigroup's long position.| Cognizant Technology vs. Fidelity National Information | Cognizant Technology vs. Uber Technologies | Cognizant Technology vs. Palantir Technologies | Cognizant Technology vs. Dell Technologies |
| Citigroup vs. Cognizant Technology Solutions | Citigroup vs. Tyson Foods | Citigroup vs. Raytheon Technologies | Citigroup vs. Zoom Video Communications |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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