Correlation Between CDW Corp and EPAM Systems
Can any of the company-specific risk be diversified away by investing in both CDW Corp and EPAM Systems 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 EPAM Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CDW Corp and EPAM Systems, you can compare the effects of market volatilities on CDW Corp and EPAM Systems 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 EPAM Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of CDW Corp and EPAM Systems.
Diversification Opportunities for CDW Corp and EPAM Systems
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between CDW and EPAM is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding CDW Corp and EPAM Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EPAM Systems 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 EPAM Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EPAM Systems has no effect on the direction of CDW Corp i.e., CDW Corp and EPAM Systems go up and down completely randomly.
Pair Corralation between CDW Corp and EPAM Systems
Considering the 90-day investment horizon CDW Corp is expected to generate 0.79 times more return on investment than EPAM Systems. However, CDW Corp is 1.27 times less risky than EPAM Systems. It trades about -0.23 of its potential returns per unit of risk. EPAM Systems is currently generating about -0.3 per unit of risk. If you would invest 25,412 in CDW Corp on January 26, 2024 and sell it today you would lose (1,343) from holding CDW Corp or give up 5.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CDW Corp vs. EPAM Systems
Performance |
| Timeline |
| CDW Corp |
| EPAM Systems |
CDW Corp and EPAM Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CDW Corp and EPAM Systems
The main advantage of trading using opposite CDW Corp and EPAM Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDW Corp position performs unexpectedly, EPAM Systems 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 EPAM Systems will offset losses from the drop in EPAM Systems' long position.| CDW Corp vs. CACI International | CDW Corp vs. Jack Henry Associates | CDW Corp vs. Broadridge Financial Solutions | CDW Corp vs. ExlService Holdings |
| EPAM Systems vs. CACI International | EPAM Systems vs. CDW Corp | EPAM Systems vs. Jack Henry Associates | EPAM Systems vs. Broadridge Financial Solutions |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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