Correlation Between Cognizant Technology and Illumina
Can any of the company-specific risk be diversified away by investing in both Cognizant Technology and Illumina 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 Illumina 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 Illumina, you can compare the effects of market volatilities on Cognizant Technology and Illumina 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 Illumina. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognizant Technology and Illumina.
Diversification Opportunities for Cognizant Technology and Illumina
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cognizant and Illumina is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Cognizant Technology Solutions and Illumina in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Illumina 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 Illumina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Illumina has no effect on the direction of Cognizant Technology i.e., Cognizant Technology and Illumina go up and down completely randomly.
Pair Corralation between Cognizant Technology and Illumina
Assuming the 90 days trading horizon Cognizant Technology is expected to generate 2.34 times less return on investment than Illumina. But when comparing it to its historical volatility, Cognizant Technology Solutions is 23.18 times less risky than Illumina. It trades about 0.22 of its potential returns per unit of risk. Illumina is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 17,544 in Illumina on September 12, 2024 and sell it today you would earn a total of 84.00 from holding Illumina or generate 0.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Cognizant Technology Solutions vs. Illumina
Performance |
| Timeline |
| Cognizant Technology |
| Illumina |
Cognizant Technology and Illumina Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cognizant Technology and Illumina
The main advantage of trading using opposite Cognizant Technology and Illumina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognizant Technology position performs unexpectedly, Illumina 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 Illumina will offset losses from the drop in Illumina'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 |
| Illumina vs. Zoom Video Communications | Illumina vs. GP Investments | Illumina vs. Take Two Interactive Software | Illumina vs. Monster Beverage |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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