Correlation Between Cognizant Technology and Fidelity National
Can any of the company-specific risk be diversified away by investing in both Cognizant Technology and Fidelity National 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 Fidelity National 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 Fidelity National Information, you can compare the effects of market volatilities on Cognizant Technology and Fidelity National 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 Fidelity National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognizant Technology and Fidelity National.
Diversification Opportunities for Cognizant Technology and Fidelity National
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cognizant and Fidelity is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Cognizant Technology Solutions and Fidelity National Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity National 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 Fidelity National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity National has no effect on the direction of Cognizant Technology i.e., Cognizant Technology and Fidelity National go up and down completely randomly.
Pair Corralation between Cognizant Technology and Fidelity National
Assuming the 90 days trading horizon Cognizant Technology Solutions is expected to generate 0.75 times more return on investment than Fidelity National. However, Cognizant Technology Solutions is 1.33 times less risky than Fidelity National. It trades about 0.07 of its potential returns per unit of risk. Fidelity National Information is currently generating about 0.04 per unit of risk. If you would invest 32,320 in Cognizant Technology Solutions on August 26, 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 | Significant |
| Accuracy | 66.13% |
| Values | Daily Returns |
Cognizant Technology Solutions vs. Fidelity National Information
Performance |
| Timeline |
| Cognizant Technology |
| Fidelity National |
Cognizant Technology and Fidelity National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cognizant Technology and Fidelity National
The main advantage of trading using opposite Cognizant Technology and Fidelity National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognizant Technology position performs unexpectedly, Fidelity National 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 Fidelity National will offset losses from the drop in Fidelity National's long position.| Cognizant Technology vs. Charter Communications | Cognizant Technology vs. New Oriental Education | Cognizant Technology vs. TAL Education Group | Cognizant Technology vs. United Airlines Holdings |
| Fidelity National vs. Fras le SA | Fidelity National vs. Clave Indices De | Fidelity National vs. BTG Pactual Logstica | Fidelity National vs. Telefonaktiebolaget LM Ericsson |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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