Correlation Between European Metals and Cognizant Technology
Can any of the company-specific risk be diversified away by investing in both European Metals 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 European Metals and Cognizant Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between European Metals Holdings and Cognizant Technology Solutions, you can compare the effects of market volatilities on European Metals 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 European Metals with a short position of Cognizant Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Metals and Cognizant Technology.
Diversification Opportunities for European Metals and Cognizant Technology
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between European and Cognizant is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding European Metals Holdings and Cognizant Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cognizant Technology and European Metals 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 European Metals Holdings 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 European Metals i.e., European Metals and Cognizant Technology go up and down completely randomly.
Pair Corralation between European Metals and Cognizant Technology
Assuming the 90 days trading horizon European Metals Holdings is expected to under-perform the Cognizant Technology. In addition to that, European Metals is 3.92 times more volatile than Cognizant Technology Solutions. It trades about -0.1 of its total potential returns per unit of risk. Cognizant Technology Solutions is currently generating about -0.2 per unit of volatility. If you would invest 8,601 in Cognizant Technology Solutions on December 8, 2024 and sell it today you would lose (388.00) from holding Cognizant Technology Solutions or give up 4.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
European Metals Holdings vs. Cognizant Technology Solutions
Performance |
| Timeline |
| European Metals Holdings |
| Cognizant Technology |
European Metals and Cognizant Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Metals and Cognizant Technology
The main advantage of trading using opposite European Metals and Cognizant Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Metals 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.| European Metals vs. Norwegian Air Shuttle | European Metals vs. Zurich Insurance Group | European Metals vs. United Utilities Group | European Metals vs. Scandinavian Tobacco Group |
| Cognizant Technology vs. Porvair plc | Cognizant Technology vs. Kaufman Et Broad | Cognizant Technology vs. Lindsell Train Investment | Cognizant Technology vs. Wizz Air Holdings |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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