Correlation Between Future Metals and Cognizant Technology
Can any of the company-specific risk be diversified away by investing in both Future 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 Future 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 Future Metals NL and Cognizant Technology Solutions, you can compare the effects of market volatilities on Future 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 Future Metals with a short position of Cognizant Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Future Metals and Cognizant Technology.
Diversification Opportunities for Future Metals and Cognizant Technology
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Future and Cognizant is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Future Metals NL and Cognizant Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cognizant Technology and Future 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 Future Metals NL 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 Future Metals i.e., Future Metals and Cognizant Technology go up and down completely randomly.
Pair Corralation between Future Metals and Cognizant Technology
Assuming the 90 days trading horizon Future Metals NL is expected to under-perform the Cognizant Technology. In addition to that, Future Metals is 2.81 times more volatile than Cognizant Technology Solutions. It trades about -0.36 of its total potential returns per unit of risk. Cognizant Technology Solutions is currently generating about 0.01 per unit of volatility. If you would invest 8,133 in Cognizant Technology Solutions on September 13, 2024 and sell it today you would earn a total of 0.00 from holding Cognizant Technology Solutions or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Future Metals NL vs. Cognizant Technology Solutions
Performance |
| Timeline |
| Future Metals NL |
| Cognizant Technology |
Future Metals and Cognizant Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Future Metals and Cognizant Technology
The main advantage of trading using opposite Future Metals and Cognizant Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Future 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.| Future Metals vs. Givaudan SA | Future Metals vs. Antofagasta PLC | Future Metals vs. Ferrexpo PLC | Future Metals vs. Atalaya Mining |
| Cognizant Technology vs. Samsung Electronics Co | Cognizant Technology vs. Samsung Electronics Co | Cognizant Technology vs. Hyundai Motor | Cognizant Technology vs. Reliance Industries Ltd |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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