Correlation Between AMADEUS IT and CDW
Can any of the company-specific risk be diversified away by investing in both AMADEUS IT and CDW 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 AMADEUS IT and CDW into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AMADEUS IT GRP and CDW Corporation, you can compare the effects of market volatilities on AMADEUS IT and CDW 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 AMADEUS IT with a short position of CDW. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMADEUS IT and CDW.
Diversification Opportunities for AMADEUS IT and CDW
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between AMADEUS and CDW is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding AMADEUS IT GRP and CDW Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDW Corporation and AMADEUS IT 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 AMADEUS IT GRP are associated (or correlated) with CDW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDW Corporation has no effect on the direction of AMADEUS IT i.e., AMADEUS IT and CDW go up and down completely randomly.
Pair Corralation between AMADEUS IT and CDW
Assuming the 90 days trading horizon AMADEUS IT GRP is expected to generate 0.84 times more return on investment than CDW. However, AMADEUS IT GRP is 1.19 times less risky than CDW. It trades about 0.04 of its potential returns per unit of risk. CDW Corporation is currently generating about 0.01 per unit of risk. If you would invest 5,608 in AMADEUS IT GRP on November 5, 2024 and sell it today you would earn a total of 1,342 from holding AMADEUS IT GRP or generate 23.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AMADEUS IT GRP vs. CDW Corp.
Performance |
| Timeline |
| AMADEUS IT GRP |
| CDW Corporation |
AMADEUS IT and CDW Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AMADEUS IT and CDW
The main advantage of trading using opposite AMADEUS IT and CDW positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMADEUS IT position performs unexpectedly, CDW 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 will offset losses from the drop in CDW's long position.| AMADEUS IT vs. WESANA HEALTH HOLD | AMADEUS IT vs. Treasury Wine Estates | AMADEUS IT vs. ANTA SPORTS PRODUCT | AMADEUS IT vs. TOWNSQUARE MEDIA INC |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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