Correlation Between CDW and AMADEUS IT
Can any of the company-specific risk be diversified away by investing in both CDW and AMADEUS IT 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 and AMADEUS IT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CDW Corporation and AMADEUS IT GRP, you can compare the effects of market volatilities on CDW and AMADEUS IT 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 with a short position of AMADEUS IT. Check out your portfolio center. Please also check ongoing floating volatility patterns of CDW and AMADEUS IT.
Diversification Opportunities for CDW and AMADEUS IT
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CDW and AMADEUS is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding CDW Corp. and AMADEUS IT GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMADEUS IT GRP and CDW 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 Corporation are associated (or correlated) with AMADEUS IT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMADEUS IT GRP has no effect on the direction of CDW i.e., CDW and AMADEUS IT go up and down completely randomly.
Pair Corralation between CDW and AMADEUS IT
Assuming the 90 days horizon CDW is expected to generate 3.74 times less return on investment than AMADEUS IT. In addition to that, CDW is 1.19 times more volatile than AMADEUS IT GRP. It trades about 0.01 of its total potential returns per unit of risk. AMADEUS IT GRP is currently generating about 0.04 per unit of volatility. 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 |
CDW Corp. vs. AMADEUS IT GRP
Performance |
| Timeline |
| CDW Corporation |
| AMADEUS IT GRP |
CDW and AMADEUS IT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CDW and AMADEUS IT
The main advantage of trading using opposite CDW and AMADEUS IT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDW position performs unexpectedly, AMADEUS IT 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 AMADEUS IT will offset losses from the drop in AMADEUS IT's long position.The idea behind CDW Corporation and AMADEUS IT GRP pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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