Correlation Between CDW Corp and Wipro Limited
Can any of the company-specific risk be diversified away by investing in both CDW Corp and Wipro Limited 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 Wipro Limited into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CDW Corp and Wipro Limited ADR, you can compare the effects of market volatilities on CDW Corp and Wipro Limited 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 Wipro Limited. Check out your portfolio center. Please also check ongoing floating volatility patterns of CDW Corp and Wipro Limited.
Diversification Opportunities for CDW Corp and Wipro Limited
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CDW and Wipro is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding CDW Corp and Wipro Limited ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wipro Limited 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 Wipro Limited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wipro Limited ADR has no effect on the direction of CDW Corp i.e., CDW Corp and Wipro Limited go up and down completely randomly.
Pair Corralation between CDW Corp and Wipro Limited
Considering the 90-day investment horizon CDW Corp is expected to under-perform the Wipro Limited. But the stock apears to be less risky and, when comparing its historical volatility, CDW Corp is 1.09 times less risky than Wipro Limited. The stock trades about -0.07 of its potential returns per unit of risk. The Wipro Limited ADR is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 526.00 in Wipro Limited ADR on August 27, 2024 and sell it today you would earn a total of 181.00 from holding Wipro Limited ADR or generate 34.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CDW Corp vs. Wipro Limited ADR
Performance |
| Timeline |
| CDW Corp |
| Wipro Limited ADR |
CDW Corp and Wipro Limited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CDW Corp and Wipro Limited
The main advantage of trading using opposite CDW Corp and Wipro Limited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDW Corp position performs unexpectedly, Wipro Limited 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 Wipro Limited will offset losses from the drop in Wipro Limited's long position.| CDW Corp vs. Plexus Corp | CDW Corp vs. Jabil Circuit | CDW Corp vs. Sanmina | CDW Corp vs. Methode Electronics |
| Wipro Limited vs. Cognizant Technology Solutions | Wipro Limited vs. Accenture plc | Wipro Limited vs. Gartner | Wipro Limited vs. Infosys Ltd ADR |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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