Correlation Between Cognizant Technology and General Dynamics
Can any of the company-specific risk be diversified away by investing in both Cognizant Technology and General Dynamics 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 General Dynamics 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 General Dynamics, you can compare the effects of market volatilities on Cognizant Technology and General Dynamics 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 General Dynamics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognizant Technology and General Dynamics.
Diversification Opportunities for Cognizant Technology and General Dynamics
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cognizant and General is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Cognizant Technology Solutions and General Dynamics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Dynamics 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 General Dynamics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Dynamics has no effect on the direction of Cognizant Technology i.e., Cognizant Technology and General Dynamics go up and down completely randomly.
Pair Corralation between Cognizant Technology and General Dynamics
Assuming the 90 days trading horizon Cognizant Technology Solutions is expected to generate 0.54 times more return on investment than General Dynamics. However, Cognizant Technology Solutions is 1.84 times less risky than General Dynamics. It trades about 0.02 of its potential returns per unit of risk. General Dynamics is currently generating about -0.01 per unit of risk. 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 | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cognizant Technology Solutions vs. General Dynamics
Performance |
| Timeline |
| Cognizant Technology |
| General Dynamics |
Cognizant Technology and General Dynamics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cognizant Technology and General Dynamics
The main advantage of trading using opposite Cognizant Technology and General Dynamics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognizant Technology position performs unexpectedly, General Dynamics 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 General Dynamics will offset losses from the drop in General Dynamics' long position.| Cognizant Technology vs. Bio Techne | Cognizant Technology vs. Technos SA | Cognizant Technology vs. Micron Technology | Cognizant Technology vs. Marvell Technology |
| General Dynamics vs. The Trade Desk | General Dynamics vs. Unity Software | General Dynamics vs. salesforce inc | General Dynamics vs. MAHLE Metal Leve |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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