Correlation Between CDW and Capgemini
Can any of the company-specific risk be diversified away by investing in both CDW and Capgemini 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 Capgemini into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CDW Corporation and Capgemini SE, you can compare the effects of market volatilities on CDW and Capgemini 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 Capgemini. Check out your portfolio center. Please also check ongoing floating volatility patterns of CDW and Capgemini.
Diversification Opportunities for CDW and Capgemini
Almost no diversification
The 3 months correlation between CDW and Capgemini is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding CDW Corp. and Capgemini SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capgemini SE 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 Capgemini. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capgemini SE has no effect on the direction of CDW i.e., CDW and Capgemini go up and down completely randomly.
Pair Corralation between CDW and Capgemini
Assuming the 90 days horizon CDW Corporation is expected to generate 1.12 times more return on investment than Capgemini. However, CDW is 1.12 times more volatile than Capgemini SE. It trades about 0.2 of its potential returns per unit of risk. Capgemini SE is currently generating about 0.11 per unit of risk. If you would invest 17,175 in CDW Corporation on October 26, 2024 and sell it today you would earn a total of 1,735 from holding CDW Corporation or generate 10.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CDW Corp. vs. Capgemini SE
Performance |
| Timeline |
| CDW Corporation |
| Capgemini SE |
CDW and Capgemini Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CDW and Capgemini
The main advantage of trading using opposite CDW and Capgemini positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDW position performs unexpectedly, Capgemini 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 Capgemini will offset losses from the drop in Capgemini's long position.| CDW vs. SILICON LABORATOR | CDW vs. JAPAN TOBACCO UNSPADR12 | CDW vs. GRUPO CARSO A1 | CDW vs. TIANDE CHEMICAL |
| Capgemini vs. UNIQA INSURANCE GR | Capgemini vs. Webster Financial | Capgemini vs. CHIBA BANK | Capgemini vs. Broadridge Financial Solutions |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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