Correlation Between International Business and CDW Corp
Can any of the company-specific risk be diversified away by investing in both International Business 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 International Business and CDW Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Business Machines and CDW Corp, you can compare the effects of market volatilities on International Business 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 International Business with a short position of CDW Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Business and CDW Corp.
Diversification Opportunities for International Business and CDW Corp
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between International and CDW is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and CDW Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDW Corp and International Business 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 International Business Machines 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 International Business i.e., International Business and CDW Corp go up and down completely randomly.
Pair Corralation between International Business and CDW Corp
Considering the 90-day investment horizon International Business Machines is expected to generate 0.86 times more return on investment than CDW Corp. However, International Business Machines is 1.17 times less risky than CDW Corp. It trades about -0.29 of its potential returns per unit of risk. CDW Corp is currently generating about -0.35 per unit of risk. If you would invest 19,190 in International Business Machines on January 21, 2024 and sell it today you would lose (1,032) from holding International Business Machines or give up 5.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Business Machine vs. CDW Corp
Performance |
| Timeline |
| International Business |
| CDW Corp |
International Business and CDW Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Business and CDW Corp
The main advantage of trading using opposite International Business and CDW Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Business 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.| International Business vs. Information Services Group | International Business vs. Home Bancorp | International Business vs. CRA International | International Business vs. Aquagold International |
| CDW Corp vs. Maximus | CDW Corp vs. Network 1 Technologies | CDW Corp vs. First Advantage Corp | CDW Corp vs. BrightView 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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