Correlation Between Monks Investment and Cognizant Technology
Can any of the company-specific risk be diversified away by investing in both Monks Investment 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 Monks Investment and Cognizant Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Monks Investment Trust and Cognizant Technology Solutions, you can compare the effects of market volatilities on Monks Investment 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 Monks Investment with a short position of Cognizant Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monks Investment and Cognizant Technology.
Diversification Opportunities for Monks Investment and Cognizant Technology
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Monks and Cognizant is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Monks Investment Trust and Cognizant Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cognizant Technology and Monks Investment 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 Monks Investment Trust 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 Monks Investment i.e., Monks Investment and Cognizant Technology go up and down completely randomly.
Pair Corralation between Monks Investment and Cognizant Technology
Assuming the 90 days trading horizon Monks Investment Trust is expected to generate 0.98 times more return on investment than Cognizant Technology. However, Monks Investment Trust is 1.03 times less risky than Cognizant Technology. It trades about -0.12 of its potential returns per unit of risk. Cognizant Technology Solutions is currently generating about -0.33 per unit of risk. If you would invest 127,800 in Monks Investment Trust on October 15, 2024 and sell it today you would lose (2,600) from holding Monks Investment Trust or give up 2.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Monks Investment Trust vs. Cognizant Technology Solutions
Performance |
| Timeline |
| Monks Investment Trust |
| Cognizant Technology |
Monks Investment and Cognizant Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monks Investment and Cognizant Technology
The main advantage of trading using opposite Monks Investment and Cognizant Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monks Investment 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.| Monks Investment vs. Induction Healthcare Group | Monks Investment vs. Bellevue Healthcare Trust | Monks Investment vs. MyHealthChecked Plc | Monks Investment vs. Ecofin Global Utilities |
| Cognizant Technology vs. Broadcom | Cognizant Technology vs. Fevertree Drinks Plc | Cognizant Technology vs. Supermarket Income REIT | Cognizant Technology vs. Monster Beverage Corp |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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