Correlation Between CDW Corp and Castellum

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

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

Diversification Opportunities for CDW Corp and Castellum

-0.49

Correlation Coefficient

CDW Corp  Castellum

Very good diversification

The 3 months correlation between CDW and Castellum is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding CDW Corp and Castellum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Castellum 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 Castellum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Castellum has no effect on the direction of CDW Corp i.e., CDW Corp and Castellum go up and down completely randomly.

Pair Corralation between CDW Corp and Castellum

Considering the 90-day investment horizon CDW Corp is expected to under-perform the Castellum. But the stock apears to be less risky and, when comparing its historical volatility, CDW Corp is 14.8 times less risky than Castellum. The stock trades about -0.14 of its potential returns per unit of risk. The Castellum is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest  16.00  in Castellum on September 24, 2024 and sell it today you would earn a total of  26.20  from holding Castellum or generate 163.75% return on investment over 90 days.

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

CDW Corp  vs.  Castellum

CDW Corp

Risk-Adjusted Performance

0 of 100

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 inconsistent performance in the last few months, the Stock's fundamental indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Castellum

Risk-Adjusted Performance

13 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Castellum are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Castellum displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CDW Corp and Castellum

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

The idea behind CDW Corp and Castellum 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.