Correlation Between Vale SA and Cognizant Technology
Can any of the company-specific risk be diversified away by investing in both Vale SA 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 Vale SA and Cognizant Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vale SA and Cognizant Technology Solutions, you can compare the effects of market volatilities on Vale SA 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 Vale SA with a short position of Cognizant Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vale SA and Cognizant Technology.
Diversification Opportunities for Vale SA and Cognizant Technology
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Vale and Cognizant is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Vale SA and Cognizant Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cognizant Technology and Vale SA 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 Vale SA 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 Vale SA i.e., Vale SA and Cognizant Technology go up and down completely randomly.
Pair Corralation between Vale SA and Cognizant Technology
Assuming the 90 days trading horizon Vale SA is expected to under-perform the Cognizant Technology. In addition to that, Vale SA is 14.64 times more volatile than Cognizant Technology Solutions. It trades about -0.32 of its total potential returns per unit of risk. Cognizant Technology Solutions is currently generating about 0.22 per unit of volatility. If you would invest 139,394 in Cognizant Technology Solutions on September 2, 2024 and sell it today you would earn a total of 606.00 from holding Cognizant Technology Solutions or generate 0.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Vale SA vs. Cognizant Technology Solutions
Performance |
| Timeline |
| Vale SA |
| Cognizant Technology |
Vale SA and Cognizant Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vale SA and Cognizant Technology
The main advantage of trading using opposite Vale SA and Cognizant Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vale SA 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.| Vale SA vs. Cognizant Technology Solutions | Vale SA vs. Southern Copper | Vale SA vs. Capital One Financial | Vale SA vs. Genworth Financial |
| Cognizant Technology vs. The Select Sector | Cognizant Technology vs. Promotora y Operadora | Cognizant Technology vs. SPDR Series Trust | Cognizant Technology vs. iShares Trust |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
Other Complementary Tools
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |