Correlation Between Jack Henry and Cognizant Technology
Can any of the company-specific risk be diversified away by investing in both Jack Henry 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 Jack Henry and Cognizant Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jack Henry Associates and Cognizant Technology Solutions, you can compare the effects of market volatilities on Jack Henry 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 Jack Henry with a short position of Cognizant Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jack Henry and Cognizant Technology.
Diversification Opportunities for Jack Henry and Cognizant Technology
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Jack and Cognizant is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Jack Henry Associates and Cognizant Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cognizant Technology and Jack Henry 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 Jack Henry Associates 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 Jack Henry i.e., Jack Henry and Cognizant Technology go up and down completely randomly.
Pair Corralation between Jack Henry and Cognizant Technology
Given the investment horizon of 90 days Jack Henry Associates is expected to under-perform the Cognizant Technology. But the stock apears to be less risky and, when comparing its historical volatility, Jack Henry Associates is 2.2 times less risky than Cognizant Technology. The stock trades about -0.34 of its potential returns per unit of risk. The Cognizant Technology Solutions is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 7,469 in Cognizant Technology Solutions on August 27, 2024 and sell it today you would earn a total of 594.00 from holding Cognizant Technology Solutions or generate 7.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jack Henry Associates vs. Cognizant Technology Solutions
Performance |
| Timeline |
| Jack Henry Associates |
| Cognizant Technology |
Jack Henry and Cognizant Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jack Henry and Cognizant Technology
The main advantage of trading using opposite Jack Henry and Cognizant Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jack Henry 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.| Jack Henry vs. Cognizant Technology Solutions | Jack Henry vs. CDW Corp | Jack Henry vs. Gartner | Jack Henry vs. Broadridge Financial Solutions |
| 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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