Correlation Between CDW Corp and Hewlett Packard
Can any of the company-specific risk be diversified away by investing in both CDW Corp and Hewlett Packard 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 Hewlett Packard into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CDW Corp and Hewlett Packard Enterprise, you can compare the effects of market volatilities on CDW Corp and Hewlett Packard 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 Hewlett Packard. Check out your portfolio center. Please also check ongoing floating volatility patterns of CDW Corp and Hewlett Packard.
Diversification Opportunities for CDW Corp and Hewlett Packard
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CDW and Hewlett is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding CDW Corp and Hewlett Packard Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hewlett Packard Ente 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 Hewlett Packard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hewlett Packard Ente has no effect on the direction of CDW Corp i.e., CDW Corp and Hewlett Packard go up and down completely randomly.
Pair Corralation between CDW Corp and Hewlett Packard
Considering the 90-day investment horizon CDW Corp is expected to under-perform the Hewlett Packard. But the stock apears to be less risky and, when comparing its historical volatility, CDW Corp is 2.51 times less risky than Hewlett Packard. The stock trades about -0.04 of its potential returns per unit of risk. The Hewlett Packard Enterprise is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,482 in Hewlett Packard Enterprise on January 25, 2024 and sell it today you would earn a total of 209.00 from holding Hewlett Packard Enterprise or generate 14.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.62% |
| Values | Daily Returns |
CDW Corp vs. Hewlett Packard Enterprise
Performance |
| Timeline |
| CDW Corp |
| Hewlett Packard Ente |
CDW Corp and Hewlett Packard Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CDW Corp and Hewlett Packard
The main advantage of trading using opposite CDW Corp and Hewlett Packard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDW Corp position performs unexpectedly, Hewlett Packard 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 Hewlett Packard will offset losses from the drop in Hewlett Packard's long position.| CDW Corp vs. CACI International | CDW Corp vs. Jack Henry Associates | CDW Corp vs. Broadridge Financial Solutions | CDW Corp vs. ExlService Holdings |
| Hewlett Packard vs. Silicom | Hewlett Packard vs. Allot Communications | Hewlett Packard vs. Sapiens International | Hewlett Packard vs. Formula Systems 1985 |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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