Correlation Between Village Super and CDW Corp

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

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

Diversification Opportunities for Village Super and CDW Corp

-0.35

Correlation Coefficient

Village Super  CDW Corp

Very good diversification

The 3 months correlation between Village and CDW is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Village Super Market and CDW Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDW Corp and Village Super 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 Village Super Market 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 Village Super i.e., Village Super and CDW Corp go up and down completely randomly.

Pair Corralation between Village Super and CDW Corp

Assuming the 90 days horizon Village Super Market is expected to generate 0.6 times more return on investment than CDW Corp. However, Village Super Market is 1.67 times less risky than CDW Corp. It trades about 0.15 of its potential returns per unit of risk. CDW Corp is currently generating about 0.0 per unit of risk. If you would invest  3,200  in Village Super Market on February 20, 2025 and sell it today you would earn a total of  501.00  from holding Village Super Market or generate 15.66% return on investment over 90 days.

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

Village Super Market  vs.  CDW Corp

Village Super Market

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Village Super Market are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile technical and fundamental indicators, Village Super sustained solid returns over the last few months and may actually be approaching a breakup point.

CDW Corp

Risk-Adjusted Performance

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 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.

Pair Trading with Village Super and CDW Corp

The main advantage of trading using opposite Village Super and CDW Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Village Super 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.

The idea behind Village Super Market and CDW Corp 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.