Correlation Between CDW Corp and Investor Education

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

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

Diversification Opportunities for CDW Corp and Investor Education

0.0

Correlation Coefficient

CDW Corp  Investor Education

Pay attention - limited upside

The 3 months correlation between CDW and Investor is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CDW Corp and FILTER in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investor Education 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 Investor Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investor Education has no effect on the direction of CDW Corp i.e., CDW Corp and Investor Education go up and down completely randomly.

Pair Corralation between CDW Corp and Investor Education

If you would invest (100.00) in FILTER on January 29, 2024 and sell it today you would earn a total of  100.00  from holding FILTER or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

CDW Corp  vs.  FILTER

CDW Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CDW Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable fundamental indicators, CDW Corp is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Investor Education

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FILTER has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable essential indicators, Investor Education is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with CDW Corp and Investor Education

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

The idea behind CDW Corp and FILTER 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.