Correlation Between CDW Corp and CGI
Can any of the company-specific risk be diversified away by investing in both CDW Corp and CGI 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 CGI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CDW Corp and CGI Inc, you can compare the effects of market volatilities on CDW Corp and CGI 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 CGI. Check out your portfolio center. Please also check ongoing floating volatility patterns of CDW Corp and CGI.
Diversification Opportunities for CDW Corp and CGI
Very poor diversification
The 3 months correlation between CDW and CGI is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding CDW Corp and CGI Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CGI Inc 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 CGI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CGI Inc has no effect on the direction of CDW Corp i.e., CDW Corp and CGI go up and down completely randomly.
Pair Corralation between CDW Corp and CGI
Considering the 90-day investment horizon CDW Corp is expected to generate 0.56 times more return on investment than CGI. However, CDW Corp is 1.78 times less risky than CGI. It trades about 0.35 of its potential returns per unit of risk. CGI Inc is currently generating about -0.15 per unit of risk. If you would invest 24,427 in CDW Corp on December 29, 2023 and sell it today you would earn a total of 1,360 from holding CDW Corp or generate 5.57% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 95.65% |
Values | Daily Returns |
CDW Corp vs. CGI Inc
Performance |
Timeline |
CDW Corp |
CGI Inc |
CDW Corp and CGI Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CDW Corp and CGI
The main advantage of trading using opposite CDW Corp and CGI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDW Corp position performs unexpectedly, CGI 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 CGI will offset losses from the drop in CGI's long position.CDW Corp vs. Avarone Metals | CDW Corp vs. Highway Holdings Limited | CDW Corp vs. Nextera Energy | CDW Corp vs. Lion One Metals |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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