Correlation Between Marfrig Global and Cognizant Technology
Can any of the company-specific risk be diversified away by investing in both Marfrig Global 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 Marfrig Global and Cognizant Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marfrig Global Foods and Cognizant Technology Solutions, you can compare the effects of market volatilities on Marfrig Global 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 Marfrig Global with a short position of Cognizant Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marfrig Global and Cognizant Technology.
Diversification Opportunities for Marfrig Global and Cognizant Technology
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Marfrig and Cognizant is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Marfrig Global Foods and Cognizant Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cognizant Technology and Marfrig Global 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 Marfrig Global Foods 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 Marfrig Global i.e., Marfrig Global and Cognizant Technology go up and down completely randomly.
Pair Corralation between Marfrig Global and Cognizant Technology
Assuming the 90 days trading horizon Marfrig Global Foods is expected to generate 15.44 times more return on investment than Cognizant Technology. However, Marfrig Global is 15.44 times more volatile than Cognizant Technology Solutions. It trades about 0.46 of its potential returns per unit of risk. Cognizant Technology Solutions is currently generating about 0.26 per unit of risk. If you would invest 1,445 in Marfrig Global Foods on August 26, 2024 and sell it today you would earn a total of 375.00 from holding Marfrig Global Foods or generate 25.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Marfrig Global Foods vs. Cognizant Technology Solutions
Performance |
| Timeline |
| Marfrig Global Foods |
| Cognizant Technology |
Marfrig Global and Cognizant Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marfrig Global and Cognizant Technology
The main advantage of trading using opposite Marfrig Global and Cognizant Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marfrig Global 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.| Marfrig Global vs. Minerva SA | Marfrig Global vs. BRF SA | Marfrig Global vs. Companhia Siderrgica Nacional | Marfrig Global vs. Cyrela Brazil Realty |
| Cognizant Technology vs. Charter Communications | Cognizant Technology vs. New Oriental Education | Cognizant Technology vs. TAL Education Group | 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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