Correlation Between GMxico Transportes and Cognizant Technology
Can any of the company-specific risk be diversified away by investing in both GMxico Transportes 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 GMxico Transportes and Cognizant Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GMxico Transportes SAB and Cognizant Technology Solutions, you can compare the effects of market volatilities on GMxico Transportes 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 GMxico Transportes with a short position of Cognizant Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of GMxico Transportes and Cognizant Technology.
Diversification Opportunities for GMxico Transportes and Cognizant Technology
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GMxico and Cognizant is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding GMxico Transportes SAB and Cognizant Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cognizant Technology and GMxico Transportes 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 GMxico Transportes SAB 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 GMxico Transportes i.e., GMxico Transportes and Cognizant Technology go up and down completely randomly.
Pair Corralation between GMxico Transportes and Cognizant Technology
Assuming the 90 days trading horizon GMxico Transportes SAB is expected to under-perform the Cognizant Technology. In addition to that, GMxico Transportes is 1.51 times more volatile than Cognizant Technology Solutions. It trades about -0.01 of its total potential returns per unit of risk. Cognizant Technology Solutions is currently generating about 0.04 per unit of volatility. If you would invest 117,200 in Cognizant Technology Solutions on November 2, 2024 and sell it today you would earn a total of 22,800 from holding Cognizant Technology Solutions or generate 19.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GMxico Transportes SAB vs. Cognizant Technology Solutions
Performance |
| Timeline |
| GMxico Transportes SAB |
| Cognizant Technology |
GMxico Transportes and Cognizant Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GMxico Transportes and Cognizant Technology
The main advantage of trading using opposite GMxico Transportes and Cognizant Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GMxico Transportes 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.| GMxico Transportes vs. Taiwan Semiconductor Manufacturing | GMxico Transportes vs. Genworth Financial | GMxico Transportes vs. Capital One Financial | GMxico Transportes vs. CVS Health |
| Cognizant Technology vs. Southwest Airlines | Cognizant Technology vs. Lloyds Banking Group | Cognizant Technology vs. Monster Beverage Corp | Cognizant Technology vs. United Airlines 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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