Correlation Between LESTE FDO and Cognizant Technology
Can any of the company-specific risk be diversified away by investing in both LESTE FDO 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 LESTE FDO and Cognizant Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LESTE FDO INV and Cognizant Technology Solutions, you can compare the effects of market volatilities on LESTE FDO 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 LESTE FDO with a short position of Cognizant Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of LESTE FDO and Cognizant Technology.
Diversification Opportunities for LESTE FDO and Cognizant Technology
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LESTE and Cognizant is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding LESTE FDO INV and Cognizant Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cognizant Technology and LESTE FDO 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 LESTE FDO INV 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 LESTE FDO i.e., LESTE FDO and Cognizant Technology go up and down completely randomly.
Pair Corralation between LESTE FDO and Cognizant Technology
Assuming the 90 days trading horizon LESTE FDO INV is expected to under-perform the Cognizant Technology. In addition to that, LESTE FDO is 1.01 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 0.07 per unit of volatility. If you would invest 32,320 in Cognizant Technology Solutions on September 12, 2024 and sell it today you would earn a total of 11,013 from holding Cognizant Technology Solutions or generate 34.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 66.13% |
| Values | Daily Returns |
LESTE FDO INV vs. Cognizant Technology Solutions
Performance |
| Timeline |
| LESTE FDO INV |
| Cognizant Technology |
LESTE FDO and Cognizant Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LESTE FDO and Cognizant Technology
The main advantage of trading using opposite LESTE FDO and Cognizant Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LESTE FDO 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.| LESTE FDO vs. FDO INV IMOB | LESTE FDO vs. SUPREMO FUNDO DE | LESTE FDO vs. Real Estate Investment | LESTE FDO vs. NAVI CRDITO IMOBILIRIO |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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