Correlation Between VULCAN MATERIALS and Cognizant Technology
Can any of the company-specific risk be diversified away by investing in both VULCAN MATERIALS 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 VULCAN MATERIALS and Cognizant Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VULCAN MATERIALS and Cognizant Technology Solutions, you can compare the effects of market volatilities on VULCAN MATERIALS 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 VULCAN MATERIALS with a short position of Cognizant Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of VULCAN MATERIALS and Cognizant Technology.
Diversification Opportunities for VULCAN MATERIALS and Cognizant Technology
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between VULCAN and Cognizant is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding VULCAN MATERIALS and Cognizant Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cognizant Technology and VULCAN MATERIALS 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 VULCAN MATERIALS 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 VULCAN MATERIALS i.e., VULCAN MATERIALS and Cognizant Technology go up and down completely randomly.
Pair Corralation between VULCAN MATERIALS and Cognizant Technology
Assuming the 90 days trading horizon VULCAN MATERIALS is expected to generate 0.79 times more return on investment than Cognizant Technology. However, VULCAN MATERIALS is 1.26 times less risky than Cognizant Technology. It trades about 0.29 of its potential returns per unit of risk. Cognizant Technology Solutions is currently generating about 0.21 per unit of risk. If you would invest 24,600 in VULCAN MATERIALS on November 8, 2024 and sell it today you would earn a total of 2,000 from holding VULCAN MATERIALS or generate 8.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
VULCAN MATERIALS vs. Cognizant Technology Solutions
Performance |
| Timeline |
| VULCAN MATERIALS |
| Cognizant Technology |
VULCAN MATERIALS and Cognizant Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VULCAN MATERIALS and Cognizant Technology
The main advantage of trading using opposite VULCAN MATERIALS and Cognizant Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VULCAN MATERIALS 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.| VULCAN MATERIALS vs. Fevertree Drinks PLC | VULCAN MATERIALS vs. Caseys General Stores | VULCAN MATERIALS vs. SENECA FOODS A | VULCAN MATERIALS vs. Thai Beverage Public |
| Cognizant Technology vs. EITZEN CHEMICALS | Cognizant Technology vs. Mitsubishi Gas Chemical | Cognizant Technology vs. LPKF Laser Electronics | Cognizant Technology vs. TOMBADOR IRON LTD |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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