Correlation Between Cognizant Technology and Snowflake
Can any of the company-specific risk be diversified away by investing in both Cognizant Technology and Snowflake 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 Snowflake 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 Snowflake, you can compare the effects of market volatilities on Cognizant Technology and Snowflake 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 Snowflake. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognizant Technology and Snowflake.
Diversification Opportunities for Cognizant Technology and Snowflake
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Cognizant and Snowflake is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Cognizant Technology Solutions and Snowflake in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Snowflake 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 Snowflake. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Snowflake has no effect on the direction of Cognizant Technology i.e., Cognizant Technology and Snowflake go up and down completely randomly.
Pair Corralation between Cognizant Technology and Snowflake
Assuming the 90 days trading horizon Cognizant Technology is expected to generate 2.76 times less return on investment than Snowflake. But when comparing it to its historical volatility, Cognizant Technology Solutions is 2.16 times less risky than Snowflake. It trades about 0.1 of its potential returns per unit of risk. Snowflake is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,518 in Snowflake on December 5, 2024 and sell it today you would earn a total of 981.00 from holding Snowflake or generate 64.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 72.73% |
| Values | Daily Returns |
Cognizant Technology Solutions vs. Snowflake
Performance |
| Timeline |
| Cognizant Technology |
| Snowflake |
Cognizant Technology and Snowflake Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cognizant Technology and Snowflake
The main advantage of trading using opposite Cognizant Technology and Snowflake positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognizant Technology position performs unexpectedly, Snowflake 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 Snowflake will offset losses from the drop in Snowflake's long position.| Cognizant Technology vs. Tyson Foods | Cognizant Technology vs. Metalurgica Gerdau SA | Cognizant Technology vs. Multilaser Industrial SA | Cognizant Technology vs. Tres Tentos Agroindustrial |
| Snowflake vs. DENTSPLY SIRONA | Snowflake vs. Patria Investments Limited | Snowflake vs. Clover Health Investments, | Snowflake vs. Nordon Indstrias Metalrgicas |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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