Correlation Between High Wire and Cognizant Technology
Can any of the company-specific risk be diversified away by investing in both High Wire 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 High Wire and Cognizant Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between High Wire Networks and Cognizant Technology Solutions, you can compare the effects of market volatilities on High Wire 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 High Wire with a short position of Cognizant Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of High Wire and Cognizant Technology.
Diversification Opportunities for High Wire and Cognizant Technology
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between High and Cognizant is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding High Wire Networks and Cognizant Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cognizant Technology and High Wire 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 High Wire Networks 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 High Wire i.e., High Wire and Cognizant Technology go up and down completely randomly.
Pair Corralation between High Wire and Cognizant Technology
Given the investment horizon of 90 days High Wire Networks is expected to generate 14.14 times more return on investment than Cognizant Technology. However, High Wire is 14.14 times more volatile than Cognizant Technology Solutions. It trades about 0.14 of its potential returns per unit of risk. Cognizant Technology Solutions is currently generating about 0.21 per unit of risk. If you would invest 3.99 in High Wire Networks on September 2, 2024 and sell it today you would earn a total of 1.76 from holding High Wire Networks or generate 44.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
High Wire Networks vs. Cognizant Technology Solutions
Performance |
| Timeline |
| High Wire Networks |
| Cognizant Technology |
High Wire and Cognizant Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High Wire and Cognizant Technology
The main advantage of trading using opposite High Wire and Cognizant Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High Wire 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.| High Wire vs. The Travelers Companies | High Wire vs. Walt Disney | High Wire vs. Home Depot | High Wire vs. Procter Gamble |
| Cognizant Technology vs. FiscalNote Holdings | Cognizant Technology vs. Innodata | Cognizant Technology vs. Aurora Innovation | Cognizant Technology vs. Conduent |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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