Correlation Between Delta Air and Cognizant Technology
Can any of the company-specific risk be diversified away by investing in both Delta Air and Cognizant Technology 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 Delta Air and Cognizant Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Delta Air Lines and Cognizant Technology Solutions, you can compare the effects of market volatilities on Delta Air and Cognizant Technology 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 Delta Air with a short position of Cognizant Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Air and Cognizant Technology.
Diversification Opportunities for Delta Air and Cognizant Technology
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Delta and Cognizant is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and Cognizant Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cognizant Technology and Delta Air 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 Delta Air Lines are associated (or correlated) with Cognizant Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cognizant Technology has no effect on the direction of Delta Air i.e., Delta Air and Cognizant Technology go up and down completely randomly.
Pair Corralation between Delta Air and Cognizant Technology
Assuming the 90 days trading horizon Delta Air Lines is expected to generate 5.72 times more return on investment than Cognizant Technology. However, Delta Air is 5.72 times more volatile than Cognizant Technology Solutions. It trades about 0.22 of its potential returns per unit of risk. Cognizant Technology Solutions is currently generating about 0.11 per unit of risk. If you would invest 83,551 in Delta Air Lines on November 2, 2024 and sell it today you would earn a total of 57,849 from holding Delta Air Lines or generate 69.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Delta Air Lines vs. Cognizant Technology Solutions
Performance |
| Timeline |
| Delta Air Lines |
| Cognizant Technology |
Delta Air and Cognizant Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delta Air and Cognizant Technology
The main advantage of trading using opposite Delta Air and Cognizant Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Air position performs unexpectedly, Cognizant Technology 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 Cognizant Technology will offset losses from the drop in Cognizant Technology's long position.| Delta Air vs. DXC Technology | Delta Air vs. UnitedHealth Group Incorporated | Delta Air vs. Verizon Communications | Delta Air vs. New Oriental Education |
| Cognizant Technology vs. Grupo Sports World | Cognizant Technology vs. Ameriprise Financial | Cognizant Technology vs. Desarrolladora Homex SAB | Cognizant Technology vs. Verizon Communications |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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