Correlation Between Cognizant Technology and Delta Air
Can any of the company-specific risk be diversified away by investing in both Cognizant Technology and Delta Air 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 Delta Air 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 Delta Air Lines, you can compare the effects of market volatilities on Cognizant Technology and Delta Air 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 Delta Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognizant Technology and Delta Air.
Diversification Opportunities for Cognizant Technology and Delta Air
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cognizant and Delta is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Cognizant Technology Solutions and Delta Air Lines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delta Air Lines 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 Delta Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delta Air Lines has no effect on the direction of Cognizant Technology i.e., Cognizant Technology and Delta Air go up and down completely randomly.
Pair Corralation between Cognizant Technology and Delta Air
Assuming the 90 days trading horizon Cognizant Technology is expected to generate 17.8 times less return on investment than Delta Air. But when comparing it to its historical volatility, Cognizant Technology Solutions is 18.15 times less risky than Delta Air. It trades about 0.3 of its potential returns per unit of risk. Delta Air Lines is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 31,093 in Delta Air Lines on August 24, 2024 and sell it today you would earn a total of 5,876 from holding Delta Air Lines or generate 18.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 85.0% |
| Values | Daily Returns |
Cognizant Technology Solutions vs. Delta Air Lines
Performance |
| Timeline |
| Cognizant Technology |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
| Delta Air Lines |
Cognizant Technology and Delta Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cognizant Technology and Delta Air
The main advantage of trading using opposite Cognizant Technology and Delta Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognizant Technology position performs unexpectedly, Delta Air 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 Delta Air will offset losses from the drop in Delta Air's long position.| Cognizant Technology vs. Monster Beverage | Cognizant Technology vs. Multilaser Industrial SA | Cognizant Technology vs. New Oriental Education | Cognizant Technology vs. United Rentals |
| Delta Air vs. Southwest Airlines Co | Delta Air vs. United Airlines Holdings | Delta Air vs. American Airlines Group | Delta Air vs. Gol Linhas Areas |
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
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |