Correlation Between Cognizant Technology and Mitsubishi UFJ
Can any of the company-specific risk be diversified away by investing in both Cognizant Technology and Mitsubishi UFJ 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 Mitsubishi UFJ 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 Mitsubishi UFJ Financial, you can compare the effects of market volatilities on Cognizant Technology and Mitsubishi UFJ 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 Mitsubishi UFJ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognizant Technology and Mitsubishi UFJ.
Diversification Opportunities for Cognizant Technology and Mitsubishi UFJ
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cognizant and Mitsubishi is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Cognizant Technology Solutions and Mitsubishi UFJ Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi UFJ Financial 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 Mitsubishi UFJ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsubishi UFJ Financial has no effect on the direction of Cognizant Technology i.e., Cognizant Technology and Mitsubishi UFJ go up and down completely randomly.
Pair Corralation between Cognizant Technology and Mitsubishi UFJ
Assuming the 90 days trading horizon Cognizant Technology is expected to generate 21.11 times less return on investment than Mitsubishi UFJ. But when comparing it to its historical volatility, Cognizant Technology Solutions is 2.35 times less risky than Mitsubishi UFJ. It trades about 0.02 of its potential returns per unit of risk. Mitsubishi UFJ Financial is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 5,765 in Mitsubishi UFJ Financial on September 5, 2024 and sell it today you would earn a total of 1,606 from holding Mitsubishi UFJ Financial or generate 27.86% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 98.41% |
Values | Daily Returns |
Cognizant Technology Solutions vs. Mitsubishi UFJ Financial
Performance |
Timeline |
Cognizant Technology |
Mitsubishi UFJ Financial |
Cognizant Technology and Mitsubishi UFJ Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Cognizant Technology and Mitsubishi UFJ
The main advantage of trading using opposite Cognizant Technology and Mitsubishi UFJ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognizant Technology position performs unexpectedly, Mitsubishi UFJ 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 Mitsubishi UFJ will offset losses from the drop in Mitsubishi UFJ's long position.Cognizant Technology vs. SVB Financial Group | Cognizant Technology vs. Apartment Investment and | Cognizant Technology vs. HDFC Bank Limited | Cognizant Technology vs. Automatic Data Processing |
Mitsubishi UFJ vs. Livetech da Bahia | Mitsubishi UFJ vs. Marvell Technology | Mitsubishi UFJ vs. Cognizant Technology Solutions | Mitsubishi UFJ vs. Unity Software |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |