Correlation Between Plexus Corp and CDW Corp
Can any of the company-specific risk be diversified away by investing in both Plexus Corp and CDW 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 Plexus Corp and CDW Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Plexus Corp and CDW Corp, you can compare the effects of market volatilities on Plexus Corp and CDW 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 Plexus Corp with a short position of CDW Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plexus Corp and CDW Corp.
Diversification Opportunities for Plexus Corp and CDW Corp
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Plexus and CDW is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Plexus Corp and CDW Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDW Corp and Plexus 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 Plexus Corp are associated (or correlated) with CDW Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDW Corp has no effect on the direction of Plexus Corp i.e., Plexus Corp and CDW Corp go up and down completely randomly.
Pair Corralation between Plexus Corp and CDW Corp
Given the investment horizon of 90 days Plexus Corp is expected to generate 0.96 times more return on investment than CDW Corp. However, Plexus Corp is 1.04 times less risky than CDW Corp. It trades about 0.2 of its potential returns per unit of risk. CDW Corp is currently generating about -0.2 per unit of risk. If you would invest 13,155 in Plexus Corp on August 25, 2024 and sell it today you would earn a total of 2,808 from holding Plexus Corp or generate 21.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Plexus Corp vs. CDW Corp
Performance |
| Timeline |
| Plexus Corp |
| CDW Corp |
Plexus Corp and CDW Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Plexus Corp and CDW Corp
The main advantage of trading using opposite Plexus Corp and CDW Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plexus Corp position performs unexpectedly, CDW 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 CDW Corp will offset losses from the drop in CDW Corp's long position.| Plexus Corp vs. Celestica | Plexus Corp vs. Benchmark Electronics | Plexus Corp vs. Flex | Plexus Corp vs. Jabil Circuit |
| CDW Corp vs. Plexus Corp | CDW Corp vs. Benchmark Electronics | CDW Corp vs. Jabil Circuit | CDW Corp vs. Sanmina |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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