Correlation Between Cognizant Technology and Alphabet
Can any of the company-specific risk be diversified away by investing in both Cognizant Technology and Alphabet 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 Alphabet 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 Alphabet, you can compare the effects of market volatilities on Cognizant Technology and Alphabet 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 Alphabet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognizant Technology and Alphabet.
Diversification Opportunities for Cognizant Technology and Alphabet
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Cognizant and Alphabet is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Cognizant Technology Solutions and Alphabet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alphabet 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 Alphabet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alphabet has no effect on the direction of Cognizant Technology i.e., Cognizant Technology and Alphabet go up and down completely randomly.
Pair Corralation between Cognizant Technology and Alphabet
Assuming the 90 days trading horizon Cognizant Technology Solutions is expected to generate 1.12 times more return on investment than Alphabet. However, Cognizant Technology is 1.12 times more volatile than Alphabet. It trades about 0.14 of its potential returns per unit of risk. Alphabet is currently generating about 0.11 per unit of risk. If you would invest 31,739 in Cognizant Technology Solutions on November 9, 2024 and sell it today you would earn a total of 11,594 from holding Cognizant Technology Solutions or generate 36.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 24.29% |
| Values | Daily Returns |
Cognizant Technology Solutions vs. Alphabet
Performance |
| Timeline |
| Cognizant Technology |
| Alphabet |
Cognizant Technology and Alphabet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cognizant Technology and Alphabet
The main advantage of trading using opposite Cognizant Technology and Alphabet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognizant Technology position performs unexpectedly, Alphabet 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 Alphabet will offset losses from the drop in Alphabet's long position.| Cognizant Technology vs. CM Hospitalar SA | Cognizant Technology vs. Molson Coors Beverage | Cognizant Technology vs. UnitedHealth Group Incorporated | Cognizant Technology vs. Healthcare Realty Trust |
| Alphabet vs. Broadridge Financial Solutions, | Alphabet vs. LPL Financial Holdings | Alphabet vs. The Hartford Financial | Alphabet vs. New Oriental Education |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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