Correlation Between Cognizant Technology and GSK Plc
Can any of the company-specific risk be diversified away by investing in both Cognizant Technology and GSK Plc 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 GSK Plc 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 GSK plc, you can compare the effects of market volatilities on Cognizant Technology and GSK Plc 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 GSK Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognizant Technology and GSK Plc.
Diversification Opportunities for Cognizant Technology and GSK Plc
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cognizant and GSK is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Cognizant Technology Solutions and GSK plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GSK plc 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 GSK Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GSK plc has no effect on the direction of Cognizant Technology i.e., Cognizant Technology and GSK Plc go up and down completely randomly.
Pair Corralation between Cognizant Technology and GSK Plc
Assuming the 90 days trading horizon Cognizant Technology Solutions is expected to generate 0.04 times more return on investment than GSK Plc. However, Cognizant Technology Solutions is 28.37 times less risky than GSK Plc. It trades about 0.22 of its potential returns per unit of risk. GSK plc is currently generating about -0.03 per unit of risk. If you would invest 43,212 in Cognizant Technology Solutions on September 12, 2024 and sell it today you would earn a total of 121.00 from holding Cognizant Technology Solutions or generate 0.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Cognizant Technology Solutions vs. GSK plc
Performance |
| Timeline |
| Cognizant Technology |
| GSK plc |
Cognizant Technology and GSK Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cognizant Technology and GSK Plc
The main advantage of trading using opposite Cognizant Technology and GSK Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognizant Technology position performs unexpectedly, GSK Plc 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 GSK Plc will offset losses from the drop in GSK Plc's long position.| Cognizant Technology vs. Fidelity National Information | Cognizant Technology vs. Fundo Investimento Imobiliario | Cognizant Technology vs. LESTE FDO INV | Cognizant Technology vs. Fras le SA |
| GSK Plc vs. Mitsubishi UFJ Financial | GSK Plc vs. Ameriprise Financial | GSK Plc vs. Lloyds Banking Group | GSK Plc vs. Waste Management |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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