Correlation Between CDW Corp and Applied Opt
Can any of the company-specific risk be diversified away by investing in both CDW Corp and Applied Opt 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 Corp and Applied Opt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CDW Corp and Applied Opt, you can compare the effects of market volatilities on CDW Corp and Applied Opt 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 Corp with a short position of Applied Opt. Check out your portfolio center. Please also check ongoing floating volatility patterns of CDW Corp and Applied Opt.
Diversification Opportunities for CDW Corp and Applied Opt
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CDW and Applied is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding CDW Corp and Applied Opt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Opt and CDW Corp 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 Corp are associated (or correlated) with Applied Opt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Opt has no effect on the direction of CDW Corp i.e., CDW Corp and Applied Opt go up and down completely randomly.
Pair Corralation between CDW Corp and Applied Opt
Considering the 90-day investment horizon CDW Corp is expected to generate 61.32 times less return on investment than Applied Opt. But when comparing it to its historical volatility, CDW Corp is 5.32 times less risky than Applied Opt. It trades about 0.01 of its potential returns per unit of risk. Applied Opt is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 703.00 in Applied Opt on August 28, 2024 and sell it today you would earn a total of 3,088 from holding Applied Opt or generate 439.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CDW Corp vs. Applied Opt
Performance |
| Timeline |
| CDW Corp |
| Applied Opt |
CDW Corp and Applied Opt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CDW Corp and Applied Opt
The main advantage of trading using opposite CDW Corp and Applied Opt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDW Corp position performs unexpectedly, Applied Opt 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 Applied Opt will offset losses from the drop in Applied Opt's long position.| CDW Corp vs. CACI International | CDW Corp vs. Jack Henry Associates | CDW Corp vs. Broadridge Financial Solutions | CDW Corp vs. ExlService Holdings |
| Applied Opt vs. Ichor Holdings | Applied Opt vs. Fabrinet | Applied Opt vs. Hello Group | Applied Opt vs. Ultra Clean 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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