Correlation Between EPAM Systems and CDW Corp
Can any of the company-specific risk be diversified away by investing in both EPAM Systems 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 EPAM Systems and CDW Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EPAM Systems and CDW Corp, you can compare the effects of market volatilities on EPAM Systems 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 EPAM Systems with a short position of CDW Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of EPAM Systems and CDW Corp.
Diversification Opportunities for EPAM Systems and CDW Corp
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between EPAM and CDW is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding EPAM Systems and CDW Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDW Corp and EPAM Systems 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 EPAM Systems 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 EPAM Systems i.e., EPAM Systems and CDW Corp go up and down completely randomly.
Pair Corralation between EPAM Systems and CDW Corp
Given the investment horizon of 90 days EPAM Systems is expected to under-perform the CDW Corp. In addition to that, EPAM Systems is 1.49 times more volatile than CDW Corp. It trades about -0.44 of its total potential returns per unit of risk. CDW Corp is currently generating about -0.18 per unit of volatility. If you would invest 24,800 in CDW Corp on January 19, 2024 and sell it today you would lose (1,122) from holding CDW Corp or give up 4.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EPAM Systems vs. CDW Corp
Performance |
| Timeline |
| EPAM Systems |
| CDW Corp |
EPAM Systems and CDW Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EPAM Systems and CDW Corp
The main advantage of trading using opposite EPAM Systems and CDW Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EPAM Systems 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.| EPAM Systems vs. International Business Machines | EPAM Systems vs. Aurora Innovation | EPAM Systems vs. ARB IOT Group | EPAM Systems vs. 9F Inc |
| CDW Corp vs. CACI International | CDW Corp vs. Jack Henry Associates | CDW Corp vs. Broadridge Financial Solutions | CDW Corp vs. ExlService 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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