Correlation Between CDW Corp and Xerox Corp
Can any of the company-specific risk be diversified away by investing in both CDW Corp and Xerox Corp 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 Xerox Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CDW Corp and Xerox Corp, you can compare the effects of market volatilities on CDW Corp and Xerox Corp 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 Xerox Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of CDW Corp and Xerox Corp.
Diversification Opportunities for CDW Corp and Xerox Corp
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CDW and Xerox is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding CDW Corp and Xerox Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xerox Corp 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 Xerox Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xerox Corp has no effect on the direction of CDW Corp i.e., CDW Corp and Xerox Corp go up and down completely randomly.
Pair Corralation between CDW Corp and Xerox Corp
Considering the 90-day investment horizon CDW Corp is expected to under-perform the Xerox Corp. But the stock apears to be less risky and, when comparing its historical volatility, CDW Corp is 1.48 times less risky than Xerox Corp. The stock trades about -0.29 of its potential returns per unit of risk. The Xerox Corp is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 1,028 in Xerox Corp on August 27, 2024 and sell it today you would lose (112.00) from holding Xerox Corp or give up 10.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CDW Corp vs. Xerox Corp
Performance |
| Timeline |
| CDW Corp |
| Xerox Corp |
CDW Corp and Xerox Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CDW Corp and Xerox Corp
The main advantage of trading using opposite CDW Corp and Xerox Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDW Corp position performs unexpectedly, Xerox Corp 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 Xerox Corp will offset losses from the drop in Xerox Corp's long position.| CDW Corp vs. Plexus Corp | CDW Corp vs. Jabil Circuit | CDW Corp vs. Sanmina | CDW Corp vs. Methode Electronics |
| Xerox Corp vs. D Wave Quantum | Xerox Corp vs. Rigetti Computing | Xerox Corp vs. Cricut Inc | Xerox Corp vs. Quantum Computing |
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 CEOs Directory module to screen CEOs from public companies around the world.
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