Correlation Between CDW Corp and Airtel Africa
Can any of the company-specific risk be diversified away by investing in both CDW Corp and Airtel Africa 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 Airtel Africa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CDW Corp and Airtel Africa Plc, you can compare the effects of market volatilities on CDW Corp and Airtel Africa 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 Airtel Africa. Check out your portfolio center. Please also check ongoing floating volatility patterns of CDW Corp and Airtel Africa.
Diversification Opportunities for CDW Corp and Airtel Africa
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CDW and Airtel is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding CDW Corp and Airtel Africa Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airtel Africa Plc 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 Airtel Africa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airtel Africa Plc has no effect on the direction of CDW Corp i.e., CDW Corp and Airtel Africa go up and down completely randomly.
Pair Corralation between CDW Corp and Airtel Africa
Considering the 90-day investment horizon CDW Corp is expected to generate 0.9 times more return on investment than Airtel Africa. However, CDW Corp is 1.11 times less risky than Airtel Africa. It trades about 0.02 of its potential returns per unit of risk. Airtel Africa Plc is currently generating about -0.01 per unit of risk. If you would invest 16,275 in CDW Corp on August 29, 2024 and sell it today you would earn a total of 1,505 from holding CDW Corp or generate 9.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CDW Corp vs. Airtel Africa Plc
Performance |
| Timeline |
| CDW Corp |
| Airtel Africa Plc |
CDW Corp and Airtel Africa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CDW Corp and Airtel Africa
The main advantage of trading using opposite CDW Corp and Airtel Africa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDW Corp position performs unexpectedly, Airtel Africa 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 Airtel Africa will offset losses from the drop in Airtel Africa'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 |
| Airtel Africa vs. KDDI Corp | Airtel Africa vs. Amrica Mvil, SAB | Airtel Africa vs. ATT Inc | Airtel Africa vs. FingerMotion |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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