Correlation Between CDW Corp and International Business
Can any of the company-specific risk be diversified away by investing in both CDW Corp and International Business 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 CDW Corp and International Business into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CDW Corp and International Business Machines, you can compare the effects of market volatilities on CDW Corp and International Business 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 CDW Corp with a short position of International Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of CDW Corp and International Business.
Diversification Opportunities for CDW Corp and International Business
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CDW and International is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding CDW Corp and International Business Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Business and CDW Corp 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 CDW Corp are associated (or correlated) with International Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Business has no effect on the direction of CDW Corp i.e., CDW Corp and International Business go up and down completely randomly.
Pair Corralation between CDW Corp and International Business
Considering the 90-day investment horizon CDW Corp is expected to generate 1.35 times more return on investment than International Business. However, CDW Corp is 1.35 times more volatile than International Business Machines. It trades about -0.06 of its potential returns per unit of risk. International Business Machines is currently generating about -0.31 per unit of risk. If you would invest 24,502 in CDW Corp on January 16, 2024 and sell it today you would lose (364.00) from holding CDW Corp or give up 1.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CDW Corp vs. International Business Machine
Performance |
| Timeline |
| CDW Corp |
| International Business |
CDW Corp and International Business Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CDW Corp and International Business
The main advantage of trading using opposite CDW Corp and International Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDW Corp position performs unexpectedly, International Business 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 International Business will offset losses from the drop in International Business' long position.| CDW Corp vs. CACI International | CDW Corp vs. Jack Henry Associates | CDW Corp vs. Broadridge Financial Solutions | CDW Corp vs. ExlService Holdings |
| International Business vs. Globant SA | International Business vs. Concentrix | International Business vs. CDW Corp | International Business vs. BigBearai Holdings |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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