Correlation Between Cognizant Technology and SCOTT TECHNOLOGY
Can any of the company-specific risk be diversified away by investing in both Cognizant Technology and SCOTT 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 Cognizant Technology and SCOTT TECHNOLOGY 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 SCOTT TECHNOLOGY, you can compare the effects of market volatilities on Cognizant Technology and SCOTT 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 Cognizant Technology with a short position of SCOTT TECHNOLOGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognizant Technology and SCOTT TECHNOLOGY.
Diversification Opportunities for Cognizant Technology and SCOTT TECHNOLOGY
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Cognizant and SCOTT is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Cognizant Technology Solutions and SCOTT TECHNOLOGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCOTT TECHNOLOGY 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 SCOTT TECHNOLOGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCOTT TECHNOLOGY has no effect on the direction of Cognizant Technology i.e., Cognizant Technology and SCOTT TECHNOLOGY go up and down completely randomly.
Pair Corralation between Cognizant Technology and SCOTT TECHNOLOGY
Assuming the 90 days horizon Cognizant Technology is expected to generate 4.74 times less return on investment than SCOTT TECHNOLOGY. But when comparing it to its historical volatility, Cognizant Technology Solutions is 1.98 times less risky than SCOTT TECHNOLOGY. It trades about 0.07 of its potential returns per unit of risk. SCOTT TECHNOLOGY is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 96.00 in SCOTT TECHNOLOGY on September 4, 2025 and sell it today you would earn a total of 47.00 from holding SCOTT TECHNOLOGY or generate 48.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cognizant Technology Solutions vs. SCOTT TECHNOLOGY
Performance |
| Timeline |
| Cognizant Technology |
| SCOTT TECHNOLOGY |
Cognizant Technology and SCOTT TECHNOLOGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cognizant Technology and SCOTT TECHNOLOGY
The main advantage of trading using opposite Cognizant Technology and SCOTT TECHNOLOGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognizant Technology position performs unexpectedly, SCOTT 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 SCOTT TECHNOLOGY will offset losses from the drop in SCOTT TECHNOLOGY's long position.| Cognizant Technology vs. INDOFOOD AGRI RES | Cognizant Technology vs. ETFS Coffee ETC | Cognizant Technology vs. The Boston Beer | Cognizant Technology vs. BG Foods |
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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