Correlation Between CDW Corp and Amphenol

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

By analyzing existing cross correlation between CDW Corp and Amphenol, you can compare the effects of market volatilities on CDW Corp and Amphenol 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 Amphenol. Check out your portfolio center. Please also check ongoing floating volatility patterns of CDW Corp and Amphenol.

Diversification Opportunities for CDW Corp and Amphenol

0.66

Correlation Coefficient

CDW Corp  Amphenol

Poor diversification

The 3 months correlation between CDW and Amphenol is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding CDW Corp and Amphenol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amphenol 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 Amphenol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amphenol has no effect on the direction of CDW Corp i.e., CDW Corp and Amphenol go up and down completely randomly.

Pair Corralation between CDW Corp and Amphenol

Considering the 90-day investment horizon CDW Corp is expected to under-perform the Amphenol. In addition to that, CDW Corp is 1.93 times more volatile than Amphenol. It trades about -0.25 of its total potential returns per unit of risk. Amphenol is currently generating about 0.18 per unit of volatility. If you would invest  11,306  in Amphenol on February 2, 2024 and sell it today you would earn a total of  630.00  from holding Amphenol or generate 5.57% return on investment over 90 days.

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

CDW Corp  vs.  Amphenol

CDW Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CDW Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's fundamental indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Amphenol

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Amphenol are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, Amphenol demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CDW Corp and Amphenol

The main advantage of trading using opposite CDW Corp and Amphenol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDW Corp position performs unexpectedly, Amphenol 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 Amphenol will offset losses from the drop in Amphenol's long position.

The idea behind CDW Corp and Amphenol 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.