Correlation Between ExlService Holdings and Cognizant Technology
Can any of the company-specific risk be diversified away by investing in both ExlService Holdings 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 ExlService Holdings and Cognizant Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ExlService Holdings and Cognizant Technology Solutions, you can compare the effects of market volatilities on ExlService Holdings 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 ExlService Holdings with a short position of Cognizant Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of ExlService Holdings and Cognizant Technology.
Diversification Opportunities for ExlService Holdings and Cognizant Technology
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ExlService and Cognizant is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding ExlService 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 ExlService Holdings 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 ExlService 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 ExlService Holdings i.e., ExlService Holdings and Cognizant Technology go up and down completely randomly.
Pair Corralation between ExlService Holdings and Cognizant Technology
Given the investment horizon of 90 days ExlService Holdings is expected to generate 2.01 times more return on investment than Cognizant Technology. However, ExlService Holdings is 2.01 times more volatile than Cognizant Technology Solutions. It trades about 0.42 of its potential returns per unit of risk. Cognizant Technology Solutions is currently generating about 0.47 per unit of risk. If you would invest 4,438 in ExlService Holdings on November 1, 2024 and sell it today you would earn a total of 611.00 from holding ExlService Holdings or generate 13.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ExlService Holdings vs. Cognizant Technology Solutions
Performance |
| Timeline |
| ExlService Holdings |
| Cognizant Technology |
ExlService Holdings and Cognizant Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ExlService Holdings and Cognizant Technology
The main advantage of trading using opposite ExlService Holdings and Cognizant Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ExlService Holdings 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.| ExlService Holdings vs. Genpact Limited | ExlService Holdings vs. ASGN Inc | ExlService Holdings vs. TTEC Holdings | ExlService Holdings vs. WNS Holdings |
| Cognizant Technology vs. Wipro Limited ADR | Cognizant Technology vs. Accenture plc | Cognizant Technology vs. Gartner | Cognizant Technology vs. CACI International |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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