Correlation Between Cognizant Technology and T Mobile
Can any of the company-specific risk be diversified away by investing in both Cognizant Technology and T Mobile 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 T Mobile 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 T Mobile, you can compare the effects of market volatilities on Cognizant Technology and T Mobile 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 T Mobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognizant Technology and T Mobile.
Diversification Opportunities for Cognizant Technology and T Mobile
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cognizant and T1MU34 is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Cognizant Technology Solutions and T Mobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T Mobile 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 T Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T Mobile has no effect on the direction of Cognizant Technology i.e., Cognizant Technology and T Mobile go up and down completely randomly.
Pair Corralation between Cognizant Technology and T Mobile
Assuming the 90 days trading horizon Cognizant Technology is expected to generate 8.29 times less return on investment than T Mobile. But when comparing it to its historical volatility, Cognizant Technology Solutions is 7.36 times less risky than T Mobile. It trades about 0.3 of its potential returns per unit of risk. T Mobile is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 63,178 in T Mobile on August 24, 2024 and sell it today you would earn a total of 5,502 from holding T Mobile or generate 8.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 85.0% |
| Values | Daily Returns |
Cognizant Technology Solutions vs. T Mobile
Performance |
| Timeline |
| Cognizant Technology |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
| T Mobile |
Cognizant Technology and T Mobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cognizant Technology and T Mobile
The main advantage of trading using opposite Cognizant Technology and T Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognizant Technology position performs unexpectedly, T Mobile 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 T Mobile will offset losses from the drop in T Mobile's long position.| Cognizant Technology vs. Monster Beverage | Cognizant Technology vs. Multilaser Industrial SA | Cognizant Technology vs. New Oriental Education | Cognizant Technology vs. United Rentals |
| T Mobile vs. Paycom Software | T Mobile vs. Charter Communications | T Mobile vs. Take Two Interactive Software | T Mobile 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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