Correlation Between Xerox Corp and Cognizant Technology
Can any of the company-specific risk be diversified away by investing in both Xerox Corp 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 Xerox Corp and Cognizant Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xerox Corp and Cognizant Technology Solutions, you can compare the effects of market volatilities on Xerox Corp 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 Xerox Corp with a short position of Cognizant Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xerox Corp and Cognizant Technology.
Diversification Opportunities for Xerox Corp and Cognizant Technology
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Xerox and Cognizant is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Xerox Corp and Cognizant Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cognizant Technology and Xerox Corp 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 Xerox Corp 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 Xerox Corp i.e., Xerox Corp and Cognizant Technology go up and down completely randomly.
Pair Corralation between Xerox Corp and Cognizant Technology
Considering the 90-day investment horizon Xerox Corp is expected to under-perform the Cognizant Technology. In addition to that, Xerox Corp is 2.43 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 0.2 per unit of volatility. If you would invest 7,469 in Cognizant Technology Solutions on August 27, 2024 and sell it today you would earn a total of 594.00 from holding Cognizant Technology Solutions or generate 7.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xerox Corp vs. Cognizant Technology Solutions
Performance |
| Timeline |
| Xerox Corp |
| Cognizant Technology |
Xerox Corp and Cognizant Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xerox Corp and Cognizant Technology
The main advantage of trading using opposite Xerox Corp and Cognizant Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xerox Corp 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.| Xerox Corp vs. D Wave Quantum | Xerox Corp vs. Rigetti Computing | Xerox Corp vs. Cricut Inc | Xerox Corp vs. Quantum Computing |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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