Correlation Between Cognizant Technology and Chemours
Can any of the company-specific risk be diversified away by investing in both Cognizant Technology and Chemours 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 Cognizant Technology and Chemours into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cognizant Technology Solutions and The Chemours, you can compare the effects of market volatilities on Cognizant Technology and Chemours 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 Cognizant Technology with a short position of Chemours. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognizant Technology and Chemours.
Diversification Opportunities for Cognizant Technology and Chemours
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cognizant and Chemours is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Cognizant Technology Solutions and The Chemours in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chemours and Cognizant Technology 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 Cognizant Technology Solutions are associated (or correlated) with Chemours. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chemours has no effect on the direction of Cognizant Technology i.e., Cognizant Technology and Chemours go up and down completely randomly.
Pair Corralation between Cognizant Technology and Chemours
If you would invest 38,507 in The Chemours on September 26, 2024 and sell it today you would earn a total of 2,383 from holding The Chemours or generate 6.19% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Cognizant Technology Solutions vs. The Chemours
Performance |
Timeline |
Cognizant Technology |
Chemours |
Cognizant Technology and Chemours Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Cognizant Technology and Chemours
The main advantage of trading using opposite Cognizant Technology and Chemours positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognizant Technology position performs unexpectedly, Chemours 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 Chemours will offset losses from the drop in Chemours' long position.Cognizant Technology vs. Southwest Airlines | Cognizant Technology vs. KB Home | Cognizant Technology vs. Hoteles City Express | Cognizant Technology vs. Grupo Hotelero Santa |
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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