Correlation Between Cognizant Technology and Zoom Video
Can any of the company-specific risk be diversified away by investing in both Cognizant Technology and Zoom Video 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 Zoom Video 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 Zoom Video Communications, you can compare the effects of market volatilities on Cognizant Technology and Zoom Video 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 Zoom Video. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognizant Technology and Zoom Video.
Diversification Opportunities for Cognizant Technology and Zoom Video
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cognizant and Zoom is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Cognizant Technology Solutions and Zoom Video Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zoom Video Communications 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 Zoom Video. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zoom Video Communications has no effect on the direction of Cognizant Technology i.e., Cognizant Technology and Zoom Video go up and down completely randomly.
Pair Corralation between Cognizant Technology and Zoom Video
Assuming the 90 days trading horizon Cognizant Technology is expected to generate 2.9 times less return on investment than Zoom Video. But when comparing it to its historical volatility, Cognizant Technology Solutions is 1.95 times less risky than Zoom Video. It trades about 0.07 of its potential returns per unit of risk. Zoom Video Communications is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,280 in Zoom Video Communications on August 28, 2024 and sell it today you would earn a total of 800.00 from holding Zoom Video Communications or generate 62.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 72.86% |
| Values | Daily Returns |
Cognizant Technology Solutions vs. Zoom Video Communications
Performance |
| Timeline |
| Cognizant Technology |
| Zoom Video Communications |
Cognizant Technology and Zoom Video Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cognizant Technology and Zoom Video
The main advantage of trading using opposite Cognizant Technology and Zoom Video positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognizant Technology position performs unexpectedly, Zoom Video 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 Zoom Video will offset losses from the drop in Zoom Video's long position.| Cognizant Technology vs. Fras le SA | Cognizant Technology vs. Clave Indices De | Cognizant Technology vs. BTG Pactual Logstica | Cognizant Technology vs. Telefonaktiebolaget LM Ericsson |
| Zoom Video vs. The Home Depot | Zoom Video vs. Micron Technology | Zoom Video vs. Bemobi Mobile Tech | Zoom Video vs. Bio Techne |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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