Correlation Between CDW Corp and Digi International
Can any of the company-specific risk be diversified away by investing in both CDW Corp and Digi International 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 Digi International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CDW Corp and Digi International, you can compare the effects of market volatilities on CDW Corp and Digi International 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 Digi International. Check out your portfolio center. Please also check ongoing floating volatility patterns of CDW Corp and Digi International.
Diversification Opportunities for CDW Corp and Digi International
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CDW and Digi is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding CDW Corp and Digi International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digi International 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 Digi International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digi International has no effect on the direction of CDW Corp i.e., CDW Corp and Digi International go up and down completely randomly.
Pair Corralation between CDW Corp and Digi International
Considering the 90-day investment horizon CDW Corp is expected to under-perform the Digi International. But the stock apears to be less risky and, when comparing its historical volatility, CDW Corp is 1.16 times less risky than Digi International. The stock trades about -0.3 of its potential returns per unit of risk. The Digi International is currently generating about -0.23 of returns per unit of risk over similar time horizon. If you would invest 2,798 in Digi International on January 7, 2025 and sell it today you would lose (386.00) from holding Digi International or give up 13.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CDW Corp vs. Digi International
Performance |
| Timeline |
| CDW Corp |
| Digi International |
CDW Corp and Digi International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CDW Corp and Digi International
The main advantage of trading using opposite CDW Corp and Digi International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDW Corp position performs unexpectedly, Digi International 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 Digi International will offset losses from the drop in Digi International'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 |
| Digi International vs. Extreme Networks | Digi International vs. Ciena Corp | Digi International vs. Harmonic | Digi International vs. Comtech Telecommunications Corp |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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