Correlation Between First Majestic and Cognizant Technology
Can any of the company-specific risk be diversified away by investing in both First Majestic 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 First Majestic and Cognizant Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Majestic Silver and Cognizant Technology Solutions, you can compare the effects of market volatilities on First Majestic 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 First Majestic with a short position of Cognizant Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and Cognizant Technology.
Diversification Opportunities for First Majestic and Cognizant Technology
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between First and Cognizant is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Cognizant Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cognizant Technology and First Majestic 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 First Majestic Silver 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 First Majestic i.e., First Majestic and Cognizant Technology go up and down completely randomly.
Pair Corralation between First Majestic and Cognizant Technology
Assuming the 90 days horizon First Majestic is expected to generate 3.03 times less return on investment than Cognizant Technology. In addition to that, First Majestic is 2.21 times more volatile than Cognizant Technology Solutions. It trades about 0.02 of its total potential returns per unit of risk. Cognizant Technology Solutions is currently generating about 0.11 per unit of volatility. If you would invest 133,621 in Cognizant Technology Solutions on November 2, 2024 and sell it today you would earn a total of 6,379 from holding Cognizant Technology Solutions or generate 4.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Majestic Silver vs. Cognizant Technology Solutions
Performance |
| Timeline |
| First Majestic Silver |
| Cognizant Technology |
First Majestic and Cognizant Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Majestic and Cognizant Technology
The main advantage of trading using opposite First Majestic and Cognizant Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic 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.| First Majestic vs. Grupo Carso SAB | First Majestic vs. Verizon Communications | First Majestic vs. Southern Copper | First Majestic vs. The Home Depot |
| 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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