Correlation Between SOFI TECHNOLOGIES and Cognizant Technology

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

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

Diversification Opportunities for SOFI TECHNOLOGIES and Cognizant Technology

-0.18

Correlation Coefficient

SOFI TECHNOLOGIES  Cognizant Technology

Good diversification

The 3 months correlation between SOFI and Cognizant is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding SOFI TECHNOLOGIES and Cognizant Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cognizant Technology and SOFI TECHNOLOGIES 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 SOFI TECHNOLOGIES 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 SOFI TECHNOLOGIES i.e., SOFI TECHNOLOGIES and Cognizant Technology go up and down completely randomly.

Pair Corralation between SOFI TECHNOLOGIES and Cognizant Technology

Assuming the 90 days horizon SOFI TECHNOLOGIES is expected to generate 2.11 times more return on investment than Cognizant Technology. However, SOFI TECHNOLOGIES is 2.11 times more volatile than Cognizant Technology Solutions. It trades about 0.28 of its potential returns per unit of risk. Cognizant Technology Solutions is currently generating about 0.05 per unit of risk. If you would invest  1,085  in SOFI TECHNOLOGIES on April 24, 2025 and sell it today you would earn a total of  761.00  from holding SOFI TECHNOLOGIES or generate 70.14% return on investment over 90 days.

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

SOFI TECHNOLOGIES  vs.  Cognizant Technology Solutions

SOFI TECHNOLOGIES

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SOFI TECHNOLOGIES are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, SOFI TECHNOLOGIES reported solid returns over the last few months and may actually be approaching a breakup point.

Cognizant Technology

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cognizant Technology Solutions are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Cognizant Technology is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SOFI TECHNOLOGIES and Cognizant Technology

The main advantage of trading using opposite SOFI TECHNOLOGIES and Cognizant Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SOFI TECHNOLOGIES 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 SOFI TECHNOLOGIES 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.