Correlation Between Infosys and CDW
Can any of the company-specific risk be diversified away by investing in both Infosys and CDW 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 Infosys and CDW into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Infosys Limited and CDW Corporation, you can compare the effects of market volatilities on Infosys and CDW 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 Infosys with a short position of CDW. Check out your portfolio center. Please also check ongoing floating volatility patterns of Infosys and CDW.
Diversification Opportunities for Infosys and CDW
Excellent diversification
The 3 months correlation between Infosys and CDW is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Infosys Limited and CDW Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDW Corporation and Infosys 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 Infosys Limited are associated (or correlated) with CDW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDW Corporation has no effect on the direction of Infosys i.e., Infosys and CDW go up and down completely randomly.
Pair Corralation between Infosys and CDW
Assuming the 90 days horizon Infosys Limited is expected to generate 1.03 times more return on investment than CDW. However, Infosys is 1.03 times more volatile than CDW Corporation. It trades about 0.08 of its potential returns per unit of risk. CDW Corporation is currently generating about -0.15 per unit of risk. If you would invest 2,015 in Infosys Limited on September 23, 2024 and sell it today you would earn a total of 165.00 from holding Infosys Limited or generate 8.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Infosys Limited vs. CDW Corp.
Performance |
| Timeline |
| Infosys Limited |
| CDW Corporation |
Infosys and CDW Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Infosys and CDW
The main advantage of trading using opposite Infosys and CDW positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Infosys position performs unexpectedly, CDW 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 CDW will offset losses from the drop in CDW's long position.| Infosys vs. Accenture plc | Infosys vs. International Business Machines | Infosys vs. Cognizant Technology Solutions | Infosys vs. AMADEUS IT GRP |
| CDW vs. Accenture plc | CDW vs. International Business Machines | CDW vs. Infosys Limited | CDW vs. Cognizant Technology Solutions |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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