Correlation Between DXC Technology and CDW Corp
Can any of the company-specific risk be diversified away by investing in both DXC Technology and CDW Corp 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 DXC Technology and CDW Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DXC Technology Co and CDW Corp, you can compare the effects of market volatilities on DXC Technology and CDW Corp 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 DXC Technology with a short position of CDW Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of DXC Technology and CDW Corp.
Diversification Opportunities for DXC Technology and CDW Corp
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between DXC and CDW is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding DXC Technology Co and CDW Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDW Corp and DXC 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 DXC Technology Co are associated (or correlated) with CDW Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDW Corp has no effect on the direction of DXC Technology i.e., DXC Technology and CDW Corp go up and down completely randomly.
Pair Corralation between DXC Technology and CDW Corp
Considering the 90-day investment horizon DXC Technology Co is expected to under-perform the CDW Corp. In addition to that, DXC Technology is 1.78 times more volatile than CDW Corp. It trades about -0.01 of its total potential returns per unit of risk. CDW Corp is currently generating about 0.06 per unit of volatility. If you would invest 15,938 in CDW Corp on January 19, 2024 and sell it today you would earn a total of 7,740 from holding CDW Corp or generate 48.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
DXC Technology Co vs. CDW Corp
Performance |
| Timeline |
| DXC Technology |
| CDW Corp |
DXC Technology and CDW Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DXC Technology and CDW Corp
The main advantage of trading using opposite DXC Technology and CDW Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DXC Technology position performs unexpectedly, CDW Corp 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 CDW Corp will offset losses from the drop in CDW Corp's long position.| DXC Technology vs. International Business Machines | DXC Technology vs. Aurora Innovation | DXC Technology vs. ARB IOT Group | DXC Technology vs. 9F Inc |
| CDW Corp vs. CACI International | CDW Corp vs. Jack Henry Associates | CDW Corp vs. Broadridge Financial Solutions | CDW Corp vs. ExlService 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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