Correlation Between Cognizant Technology and Biogen
Can any of the company-specific risk be diversified away by investing in both Cognizant Technology and Biogen 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 Biogen 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 Biogen Inc, you can compare the effects of market volatilities on Cognizant Technology and Biogen 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 Biogen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognizant Technology and Biogen.
Diversification Opportunities for Cognizant Technology and Biogen
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Cognizant and Biogen is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Cognizant Technology Solutions and Biogen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biogen Inc 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 Biogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biogen Inc has no effect on the direction of Cognizant Technology i.e., Cognizant Technology and Biogen go up and down completely randomly.
Pair Corralation between Cognizant Technology and Biogen
Assuming the 90 days trading horizon Cognizant Technology Solutions is expected to generate 0.04 times more return on investment than Biogen. However, Cognizant Technology Solutions is 26.39 times less risky than Biogen. It trades about 0.13 of its potential returns per unit of risk. Biogen Inc is currently generating about -0.26 per unit of risk. If you would invest 139,394 in Cognizant Technology Solutions on October 25, 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 | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Cognizant Technology Solutions vs. Biogen Inc
Performance |
Timeline |
Cognizant Technology |
Biogen Inc |
Cognizant Technology and Biogen Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Cognizant Technology and Biogen
The main advantage of trading using opposite Cognizant Technology and Biogen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognizant Technology position performs unexpectedly, Biogen 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 Biogen will offset losses from the drop in Biogen's long position.Cognizant Technology vs. First Majestic Silver | Cognizant Technology vs. DXC Technology | Cognizant Technology vs. United Airlines Holdings | Cognizant Technology vs. McEwen Mining |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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