Correlation Between Richardson Electronics and CDW
Can any of the company-specific risk be diversified away by investing in both Richardson Electronics 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 Richardson Electronics and CDW into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Richardson Electronics and CDW Corporation, you can compare the effects of market volatilities on Richardson Electronics 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 Richardson Electronics with a short position of CDW. Check out your portfolio center. Please also check ongoing floating volatility patterns of Richardson Electronics and CDW.
Diversification Opportunities for Richardson Electronics and CDW
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Richardson and CDW is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Richardson Electronics and CDW Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDW Corporation and Richardson Electronics 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 Richardson Electronics 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 Richardson Electronics i.e., Richardson Electronics and CDW go up and down completely randomly.
Pair Corralation between Richardson Electronics and CDW
Assuming the 90 days horizon Richardson Electronics is expected to under-perform the CDW. In addition to that, Richardson Electronics is 1.35 times more volatile than CDW Corporation. It trades about -0.39 of its total potential returns per unit of risk. CDW Corporation is currently generating about -0.19 per unit of volatility. If you would invest 15,515 in CDW Corporation on January 14, 2025 and sell it today you would lose (2,490) from holding CDW Corporation or give up 16.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Richardson Electronics vs. CDW Corp.
Performance |
| Timeline |
| Richardson Electronics |
| CDW Corporation |
Richardson Electronics and CDW Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Richardson Electronics and CDW
The main advantage of trading using opposite Richardson Electronics and CDW positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Richardson Electronics 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.| Richardson Electronics vs. Check Point Software | Richardson Electronics vs. Columbia Sportswear | Richardson Electronics vs. AviChina Industry Technology | Richardson Electronics vs. Gaming and Leisure |
| CDW vs. Accenture plc | CDW vs. International Business Machines | CDW vs. International Business Machines | CDW vs. Infosys Limited |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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