Correlation Between Cognizant Technology and Monster Beverage
Can any of the company-specific risk be diversified away by investing in both Cognizant Technology and Monster Beverage 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 Monster Beverage 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 Monster Beverage, you can compare the effects of market volatilities on Cognizant Technology and Monster Beverage 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 Monster Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognizant Technology and Monster Beverage.
Diversification Opportunities for Cognizant Technology and Monster Beverage
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cognizant and Monster is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Cognizant Technology Solutions and Monster Beverage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monster Beverage 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 Monster Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monster Beverage has no effect on the direction of Cognizant Technology i.e., Cognizant Technology and Monster Beverage go up and down completely randomly.
Pair Corralation between Cognizant Technology and Monster Beverage
Assuming the 90 days trading horizon Cognizant Technology is expected to generate 4.62 times less return on investment than Monster Beverage. But when comparing it to its historical volatility, Cognizant Technology Solutions is 1.98 times less risky than Monster Beverage. It trades about 0.08 of its potential returns per unit of risk. Monster Beverage is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 3,239 in Monster Beverage on August 26, 2024 and sell it today you would earn a total of 695.00 from holding Monster Beverage or generate 21.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cognizant Technology Solutions vs. Monster Beverage
Performance |
| Timeline |
| Cognizant Technology |
| Monster Beverage |
Cognizant Technology and Monster Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cognizant Technology and Monster Beverage
The main advantage of trading using opposite Cognizant Technology and Monster Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognizant Technology position performs unexpectedly, Monster Beverage 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 Monster Beverage will offset losses from the drop in Monster Beverage'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 |
| Monster Beverage vs. Marfrig Global Foods | Monster Beverage vs. Cognizant Technology Solutions | Monster Beverage vs. Take Two Interactive Software | Monster Beverage vs. Electronic Arts |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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