Correlation Between Cognizant Technology and Wipro Limited
Can any of the company-specific risk be diversified away by investing in both Cognizant Technology and Wipro Limited 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 Wipro Limited 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 Wipro Limited ADR, you can compare the effects of market volatilities on Cognizant Technology and Wipro Limited 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 Wipro Limited. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognizant Technology and Wipro Limited.
Diversification Opportunities for Cognizant Technology and Wipro Limited
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Cognizant and Wipro is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Cognizant Technology Solutions and Wipro Limited ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wipro Limited ADR 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 Wipro Limited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wipro Limited ADR has no effect on the direction of Cognizant Technology i.e., Cognizant Technology and Wipro Limited go up and down completely randomly.
Pair Corralation between Cognizant Technology and Wipro Limited
Given the investment horizon of 90 days Cognizant Technology Solutions is expected to generate 0.91 times more return on investment than Wipro Limited. However, Cognizant Technology Solutions is 1.1 times less risky than Wipro Limited. It trades about 0.1 of its potential returns per unit of risk. Wipro Limited ADR is currently generating about 0.05 per unit of risk. If you would invest 7,076 in Cognizant Technology Solutions on April 23, 2025 and sell it today you would earn a total of 604.00 from holding Cognizant Technology Solutions or generate 8.54% 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. Wipro Limited ADR
Performance |
| Timeline |
| Cognizant Technology |
| Wipro Limited ADR |
Cognizant Technology and Wipro Limited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cognizant Technology and Wipro Limited
The main advantage of trading using opposite Cognizant Technology and Wipro Limited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognizant Technology position performs unexpectedly, Wipro Limited 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 Wipro Limited will offset losses from the drop in Wipro Limited's long position.| Cognizant Technology vs. Infosys Ltd ADR | Cognizant Technology vs. Gartner | Cognizant Technology vs. Broadridge Financial Solutions | Cognizant Technology vs. Fiserv, |
| Wipro Limited vs. Infosys Ltd ADR | Wipro Limited vs. Cognizant Technology Solutions | Wipro Limited vs. WNS Holdings | Wipro Limited vs. CLARIVATE PLC |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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