Correlation Between UBS Group and Cognizant Technology
Can any of the company-specific risk be diversified away by investing in both UBS Group 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 UBS Group and Cognizant Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UBS Group AG and Cognizant Technology Solutions, you can compare the effects of market volatilities on UBS Group 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 UBS Group with a short position of Cognizant Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of UBS Group and Cognizant Technology.
Diversification Opportunities for UBS Group and Cognizant Technology
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between UBS and Cognizant is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding UBS Group AG and Cognizant Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cognizant Technology and UBS Group 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 UBS Group AG 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 UBS Group i.e., UBS Group and Cognizant Technology go up and down completely randomly.
Pair Corralation between UBS Group and Cognizant Technology
Assuming the 90 days trading horizon UBS Group AG is expected to generate 3.92 times more return on investment than Cognizant Technology. However, UBS Group is 3.92 times more volatile than Cognizant Technology Solutions. It trades about 0.32 of its potential returns per unit of risk. Cognizant Technology Solutions is currently generating about 0.22 per unit of risk. If you would invest 64,400 in UBS Group AG on September 14, 2024 and sell it today you would earn a total of 1,600 from holding UBS Group AG or generate 2.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
UBS Group AG vs. Cognizant Technology Solutions
Performance |
| Timeline |
| UBS Group AG |
| Cognizant Technology |
UBS Group and Cognizant Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UBS Group and Cognizant Technology
The main advantage of trading using opposite UBS Group and Cognizant Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UBS Group 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.| UBS Group vs. Grupo Sports World | UBS Group vs. Monster Beverage Corp | UBS Group vs. FibraHotel | UBS Group vs. Southern Copper |
| Cognizant Technology vs. Delta Air Lines | Cognizant Technology vs. CVS Health | Cognizant Technology vs. Verizon Communications | Cognizant Technology vs. Grupo Hotelero Santa |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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