Correlation Between AIR PRODCHEMICALS and CDW

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

By analyzing existing cross correlation between AIR PRODCHEMICALS and CDW Corporation, you can compare the effects of market volatilities on AIR PRODCHEMICALS and CDW 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 AIR PRODCHEMICALS with a short position of CDW. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIR PRODCHEMICALS and CDW.

Diversification Opportunities for AIR PRODCHEMICALS and CDW

0.37

Correlation Coefficient

AIR PRODCHEMICALS  CDW

Weak diversification

The 3 months correlation between AIR and CDW is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding AIR PRODCHEMICALS and CDW Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDW Corporation and AIR PRODCHEMICALS 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 AIR PRODCHEMICALS are associated (or correlated) with CDW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDW Corporation has no effect on the direction of AIR PRODCHEMICALS i.e., AIR PRODCHEMICALS and CDW go up and down completely randomly.

Pair Corralation between AIR PRODCHEMICALS and CDW

Assuming the 90 days trading horizon AIR PRODCHEMICALS is expected to generate 1.25 times less return on investment than CDW. But when comparing it to its historical volatility, AIR PRODCHEMICALS is 1.56 times less risky than CDW. It trades about 0.16 of its potential returns per unit of risk. CDW Corporation is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  13,241  in CDW Corporation on April 20, 2025 and sell it today you would earn a total of  2,149  from holding CDW Corporation or generate 16.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

AIR PRODCHEMICALS  vs.  CDW Corp.

AIR PRODCHEMICALS

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AIR PRODCHEMICALS are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, AIR PRODCHEMICALS unveiled solid returns over the last few months and may actually be approaching a breakup point.

CDW Corporation

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CDW Corporation are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, CDW reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AIR PRODCHEMICALS and CDW

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

The idea behind AIR PRODCHEMICALS and CDW Corporation 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.