Correlation Between Pets At and Cognizant Technology
Can any of the company-specific risk be diversified away by investing in both Pets At 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 Pets At and Cognizant Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pets at Home and Cognizant Technology Solutions, you can compare the effects of market volatilities on Pets At 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 Pets At with a short position of Cognizant Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pets At and Cognizant Technology.
Diversification Opportunities for Pets At and Cognizant Technology
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Pets and Cognizant is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Pets at Home and Cognizant Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cognizant Technology and Pets At 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 Pets at Home 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 Pets At i.e., Pets At and Cognizant Technology go up and down completely randomly.
Pair Corralation between Pets At and Cognizant Technology
Assuming the 90 days trading horizon Pets at Home is expected to under-perform the Cognizant Technology. In addition to that, Pets At is 1.58 times more volatile than Cognizant Technology Solutions. It trades about -0.1 of its total potential returns per unit of risk. Cognizant Technology Solutions is currently generating about 0.13 per unit of volatility. If you would invest 6,510 in Cognizant Technology Solutions on September 1, 2024 and sell it today you would earn a total of 1,570 from holding Cognizant Technology Solutions or generate 24.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pets at Home vs. Cognizant Technology Solutions
Performance |
| Timeline |
| Pets at Home |
| Cognizant Technology |
Pets At and Cognizant Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pets At and Cognizant Technology
The main advantage of trading using opposite Pets At and Cognizant Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pets At 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.| Pets At vs. Bellevue Healthcare Trust | Pets At vs. Silvercorp Metals | Pets At vs. Central Asia Metals | Pets At vs. Neometals |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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