Correlation Between CDW Corp and Gartner

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Can any of the company-specific risk be diversified away by investing in both CDW Corp and Gartner 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 Gartner into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CDW Corp and Gartner, you can compare the effects of market volatilities on CDW Corp and Gartner 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 Gartner. Check out your portfolio center. Please also check ongoing floating volatility patterns of CDW Corp and Gartner.

Diversification Opportunities for CDW Corp and Gartner

0.71
  Correlation Coefficient

Poor diversification

The 3 months correlation between CDW and Gartner is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding CDW Corp and Gartner in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gartner 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 Gartner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gartner has no effect on the direction of CDW Corp i.e., CDW Corp and Gartner go up and down completely randomly.

Pair Corralation between CDW Corp and Gartner

Considering the 90-day investment horizon CDW Corp is expected to generate 1.19 times less return on investment than Gartner. But when comparing it to its historical volatility, CDW Corp is 1.09 times less risky than Gartner. It trades about 0.06 of its potential returns per unit of risk. Gartner is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  28,879  in Gartner on December 30, 2023 and sell it today you would earn a total of  18,788  from holding Gartner or generate 65.06% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

CDW Corp  vs.  Gartner

 Performance 
       Timeline  
CDW Corp 

Risk-Adjusted Performance

18 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in CDW Corp are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating fundamental indicators, CDW Corp showed solid returns over the last few months and may actually be approaching a breakup point.
Gartner 

Risk-Adjusted Performance

9 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Gartner are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Gartner may actually be approaching a critical reversion point that can send shares even higher in April 2024.

CDW Corp and Gartner Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with CDW Corp and Gartner

The main advantage of trading using opposite CDW Corp and Gartner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDW Corp position performs unexpectedly, Gartner 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 Gartner will offset losses from the drop in Gartner's long position.
The idea behind CDW Corp and Gartner 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.
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.

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