Correlation Between CDK Global and CDW Corp
Can any of the company-specific risk be diversified away by investing in both CDK Global 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 CDK Global and CDW Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CDK Global Holdings and CDW Corp, you can compare the effects of market volatilities on CDK Global 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 CDK Global with a short position of CDW Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of CDK Global and CDW Corp.
Diversification Opportunities for CDK Global and CDW Corp
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between CDK and CDW is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding CDK Global Holdings and CDW Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDW Corp and CDK Global 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 CDK Global Holdings 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 CDK Global i.e., CDK Global and CDW Corp go up and down completely randomly.
Pair Corralation between CDK Global and CDW Corp
If you would invest 19,848 in CDW Corp on January 20, 2024 and sell it today you would earn a total of 3,722 from holding CDW Corp or generate 18.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 0.81% |
| Values | Daily Returns |
CDK Global Holdings vs. CDW Corp
Performance |
| Timeline |
| CDK Global Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| CDW Corp |
CDK Global and CDW Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CDK Global and CDW Corp
The main advantage of trading using opposite CDK Global and CDW Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDK Global 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.| CDK Global vs. Playa Hotels Resorts | CDK Global vs. JD Sports Fashion | CDK Global vs. Playtech plc | CDK Global vs. Emerson Radio |
| CDW Corp vs. Maximus | CDW Corp vs. Network 1 Technologies | CDW Corp vs. First Advantage Corp | CDW Corp vs. BrightView Holdings |
Check out your portfolio center.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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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