Correlation Between Cognizant Technology and Raytheon Technologies
Can any of the company-specific risk be diversified away by investing in both Cognizant Technology and Raytheon Technologies 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 Raytheon Technologies 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 Raytheon Technologies, you can compare the effects of market volatilities on Cognizant Technology and Raytheon Technologies 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 Raytheon Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognizant Technology and Raytheon Technologies.
Diversification Opportunities for Cognizant Technology and Raytheon Technologies
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Cognizant and Raytheon is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Cognizant Technology Solutions and Raytheon Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raytheon Technologies 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 Raytheon Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raytheon Technologies has no effect on the direction of Cognizant Technology i.e., Cognizant Technology and Raytheon Technologies go up and down completely randomly.
Pair Corralation between Cognizant Technology and Raytheon Technologies
Assuming the 90 days trading horizon Cognizant Technology Solutions is expected to generate 0.79 times more return on investment than Raytheon Technologies. However, Cognizant Technology Solutions is 1.27 times less risky than Raytheon Technologies. It trades about 0.12 of its potential returns per unit of risk. Raytheon Technologies is currently generating about 0.08 per unit of risk. If you would invest 30,311 in Cognizant Technology Solutions on August 30, 2024 and sell it today you would earn a total of 13,022 from holding Cognizant Technology Solutions or generate 42.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 60.43% |
| Values | Daily Returns |
Cognizant Technology Solutions vs. Raytheon Technologies
Performance |
| Timeline |
| Cognizant Technology |
| Raytheon Technologies |
Cognizant Technology and Raytheon Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cognizant Technology and Raytheon Technologies
The main advantage of trading using opposite Cognizant Technology and Raytheon Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognizant Technology position performs unexpectedly, Raytheon Technologies 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 Raytheon Technologies will offset losses from the drop in Raytheon Technologies' long position.| Cognizant Technology vs. Fidelity National Information | Cognizant Technology vs. BTG Pactual Logstica | Cognizant Technology vs. Plano Plano Desenvolvimento | Cognizant Technology vs. The Procter Gamble |
| Raytheon Technologies vs. Micron Technology | Raytheon Technologies vs. Spotify Technology SA | Raytheon Technologies vs. Charter Communications | Raytheon Technologies vs. Lupatech SA |
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 Stocks Directory module to find actively traded stocks across global markets.
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