Correlation Between CDW Corp and Concentrix

Can any of the company-specific risk be diversified away by investing in both CDW Corp and Concentrix 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 Concentrix into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CDW Corp and Concentrix, you can compare the effects of market volatilities on CDW Corp and Concentrix 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 Concentrix. Check out your portfolio center. Please also check ongoing floating volatility patterns of CDW Corp and Concentrix.

Diversification Opportunities for CDW Corp and Concentrix

0.36

Correlation Coefficient

CDW Corp  Concentrix

Weak diversification

The 3 months correlation between CDW and Concentrix is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding CDW Corp and Concentrix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Concentrix 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 Concentrix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Concentrix has no effect on the direction of CDW Corp i.e., CDW Corp and Concentrix go up and down completely randomly.

Pair Corralation between CDW Corp and Concentrix

Considering the 90-day investment horizon CDW Corp is expected to under-perform the Concentrix. But the stock apears to be less risky and, when comparing its historical volatility, CDW Corp is 3.65 times less risky than Concentrix. The stock trades about -0.04 of its potential returns per unit of risk. The Concentrix is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  4,267  in Concentrix on December 29, 2024 and sell it today you would earn a total of  1,428  from holding Concentrix or generate 33.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

CDW Corp  vs.  Concentrix

CDW Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days CDW Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, CDW Corp is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Concentrix

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Concentrix are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Concentrix exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CDW Corp and Concentrix

The main advantage of trading using opposite CDW Corp and Concentrix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDW Corp position performs unexpectedly, Concentrix 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 Concentrix will offset losses from the drop in Concentrix's long position.

The idea behind CDW Corp and Concentrix pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.