Correlation Between CDW Corp and Harmonic
Can any of the company-specific risk be diversified away by investing in both CDW Corp and Harmonic 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 Harmonic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CDW Corp and Harmonic, you can compare the effects of market volatilities on CDW Corp and Harmonic 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 Harmonic. Check out your portfolio center. Please also check ongoing floating volatility patterns of CDW Corp and Harmonic.
Diversification Opportunities for CDW Corp and Harmonic
Poor diversification
The 3 months correlation between CDW and Harmonic is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding CDW Corp and Harmonic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harmonic 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 Harmonic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harmonic has no effect on the direction of CDW Corp i.e., CDW Corp and Harmonic go up and down completely randomly.
Pair Corralation between CDW Corp and Harmonic
Considering the 90-day investment horizon CDW Corp is expected to under-perform the Harmonic. But the stock apears to be less risky and, when comparing its historical volatility, CDW Corp is 1.94 times less risky than Harmonic. The stock trades about -0.26 of its potential returns per unit of risk. The Harmonic is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 1,482 in Harmonic on August 28, 2024 and sell it today you would lose (243.00) from holding Harmonic or give up 16.4% 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. Harmonic
Performance |
| Timeline |
| CDW Corp |
| Harmonic |
CDW Corp and Harmonic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CDW Corp and Harmonic
The main advantage of trading using opposite CDW Corp and Harmonic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDW Corp position performs unexpectedly, Harmonic 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 Harmonic will offset losses from the drop in Harmonic's long position.| CDW Corp vs. Plexus Corp | CDW Corp vs. Jabil Circuit | CDW Corp vs. Sanmina | CDW Corp vs. Methode Electronics |
| Harmonic vs. NETGEAR | Harmonic vs. Juniper Networks | Harmonic vs. Digi International | Harmonic vs. Clearfield |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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