Correlation Between Infosys and CDW

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

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

Diversification Opportunities for Infosys and CDW

0.63

Correlation Coefficient

Infosys  CDW

Poor diversification

The 3 months correlation between Infosys and CDW is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Infosys Limited and CDW Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDW Corporation and Infosys 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 Infosys Limited 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 Infosys i.e., Infosys and CDW go up and down completely randomly.

Pair Corralation between Infosys and CDW

Assuming the 90 days horizon Infosys Limited is expected to generate 0.85 times more return on investment than CDW. However, Infosys Limited is 1.18 times less risky than CDW. It trades about 0.01 of its potential returns per unit of risk. CDW Corporation is currently generating about 0.0 per unit of risk. If you would invest  1,646  in Infosys Limited on March 21, 2025 and sell it today you would lose (16.00) from holding Infosys Limited or give up 0.97% of portfolio value over 90 days.

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

Infosys Limited  vs.  CDW Corp.

Infosys Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Infosys Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Infosys is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

CDW Corporation

Risk-Adjusted Performance

Very Weak

Over the last 90 days CDW Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, CDW is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Infosys and CDW

The main advantage of trading using opposite Infosys and CDW positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Infosys 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 Infosys Limited 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 Commodity Directory module to find actively traded commodities issued by global exchanges.