Correlation Between Apple and CDW
Can any of the company-specific risk be diversified away by investing in both Apple 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 Apple and CDW into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and CDW Corporation, you can compare the effects of market volatilities on Apple 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 Apple with a short position of CDW. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and CDW.
Diversification Opportunities for Apple and CDW
Very good diversification
The 3 months correlation between Apple and CDW is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and CDW Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDW Corporation and Apple 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 Apple Inc 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 Apple i.e., Apple and CDW go up and down completely randomly.
Pair Corralation between Apple and CDW
Assuming the 90 days trading horizon Apple Inc is expected to generate 0.85 times more return on investment than CDW. However, Apple Inc is 1.18 times less risky than CDW. It trades about 0.07 of its potential returns per unit of risk. CDW Corporation is currently generating about -0.03 per unit of risk. If you would invest 17,889 in Apple Inc on September 2, 2024 and sell it today you would earn a total of 4,546 from holding Apple Inc or generate 25.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. CDW Corp.
Performance |
| Timeline |
| Apple Inc |
| CDW Corporation |
Apple and CDW Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and CDW
The main advantage of trading using opposite Apple and CDW positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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.| Apple vs. British American Tobacco | Apple vs. TAL Education Group | Apple vs. G8 EDUCATION | Apple vs. Laureate Education |
| CDW vs. Superior Plus Corp | CDW vs. NMI Holdings | CDW vs. Origin Agritech | CDW vs. SIVERS SEMICONDUCTORS AB |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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