Correlation Between CGI and CDW Corp
Can any of the company-specific risk be diversified away by investing in both CGI 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 CGI and CDW Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CGI Inc and CDW Corp, you can compare the effects of market volatilities on CGI 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 CGI with a short position of CDW Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of CGI and CDW Corp.
Diversification Opportunities for CGI and CDW Corp
Average diversification
The 3 months correlation between CGI and CDW is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding CGI Inc and CDW Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDW Corp and CGI 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 CGI Inc 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 CGI i.e., CGI and CDW Corp go up and down completely randomly.
Pair Corralation between CGI and CDW Corp
Considering the 90-day investment horizon CGI is expected to generate 1.34 times less return on investment than CDW Corp. But when comparing it to its historical volatility, CGI Inc is 1.2 times less risky than CDW Corp. It trades about 0.05 of its potential returns per unit of risk. CDW Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 16,665 in CDW Corp on January 26, 2024 and sell it today you would earn a total of 7,404 from holding CDW Corp or generate 44.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CGI Inc vs. CDW Corp
Performance |
| Timeline |
| CGI Inc |
| CDW Corp |
CGI and CDW Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CGI and CDW Corp
The main advantage of trading using opposite CGI and CDW Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CGI 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.| CGI vs. CACI International | CGI vs. CDW Corp | CGI vs. Jack Henry Associates | CGI vs. Broadridge Financial Solutions |
| 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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