Correlation Between IShares Physical and Cognizant Technology

Can any of the company-specific risk be diversified away by investing in both IShares Physical 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 IShares Physical and Cognizant Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iShares Physical Silver and Cognizant Technology Solutions, you can compare the effects of market volatilities on IShares Physical 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 IShares Physical with a short position of Cognizant Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Physical and Cognizant Technology.

Diversification Opportunities for IShares Physical and Cognizant Technology

-0.29

Correlation Coefficient

IShares Physical  Cognizant Technology

Very good diversification

The 3 months correlation between IShares and Cognizant is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding iShares Physical Silver and Cognizant Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cognizant Technology and IShares Physical 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 iShares Physical Silver 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 IShares Physical i.e., IShares Physical and Cognizant Technology go up and down completely randomly.

Pair Corralation between IShares Physical and Cognizant Technology

Assuming the 90 days trading horizon iShares Physical Silver is expected to generate 1.37 times more return on investment than Cognizant Technology. However, IShares Physical is 1.37 times more volatile than Cognizant Technology Solutions. It trades about 0.07 of its potential returns per unit of risk. Cognizant Technology Solutions is currently generating about 0.06 per unit of risk. If you would invest  2,724  in iShares Physical Silver on September 2, 2024 and sell it today you would earn a total of  209.00  from holding iShares Physical Silver or generate 7.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

iShares Physical Silver  vs.  Cognizant Technology Solutions

iShares Physical Silver

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Physical Silver are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, IShares Physical may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Cognizant Technology

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cognizant Technology Solutions are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Cognizant Technology is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with IShares Physical and Cognizant Technology

The main advantage of trading using opposite IShares Physical and Cognizant Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Physical 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.

The idea behind iShares Physical Silver and Cognizant Technology Solutions pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.