Correlation Between CDW Corp and Cebu Air
Can any of the company-specific risk be diversified away by investing in both CDW Corp and Cebu Air 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 Cebu Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CDW Corp and Cebu Air ADR, you can compare the effects of market volatilities on CDW Corp and Cebu Air 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 Cebu Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of CDW Corp and Cebu Air.
Diversification Opportunities for CDW Corp and Cebu Air
Poor diversification
The 3 months correlation between CDW and Cebu is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding CDW Corp and Cebu Air ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cebu Air ADR 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 Cebu Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cebu Air ADR has no effect on the direction of CDW Corp i.e., CDW Corp and Cebu Air go up and down completely randomly.
Pair Corralation between CDW Corp and Cebu Air
Considering the 90-day investment horizon CDW Corp is expected to generate 1.39 times more return on investment than Cebu Air. However, CDW Corp is 1.39 times more volatile than Cebu Air ADR. It trades about -0.04 of its potential returns per unit of risk. Cebu Air ADR is currently generating about -0.1 per unit of risk. If you would invest 21,691 in CDW Corp on November 2, 2024 and sell it today you would lose (1,915) from holding CDW Corp or give up 8.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 96.26% |
| Values | Daily Returns |
CDW Corp vs. Cebu Air ADR
Performance |
| Timeline |
| CDW Corp |
| Cebu Air ADR |
CDW Corp and Cebu Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CDW Corp and Cebu Air
The main advantage of trading using opposite CDW Corp and Cebu Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDW Corp position performs unexpectedly, Cebu Air 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 Cebu Air will offset losses from the drop in Cebu Air'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 |
| Cebu Air vs. Apogee Therapeutics, Common | Cebu Air vs. Fidus Investment Corp | Cebu Air vs. ioneer Ltd American | Cebu Air vs. Mangazeya Mining |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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