Correlation Between CDW Corp and Katahdin Bankshares

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

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

Diversification Opportunities for CDW Corp and Katahdin Bankshares

-0.9

Correlation Coefficient

CDW Corp  Katahdin Bankshares

Pay attention - limited upside

The 3 months correlation between CDW and Katahdin is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding CDW Corp and Katahdin Bankshares Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Katahdin Bankshares Corp 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 Katahdin Bankshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Katahdin Bankshares Corp has no effect on the direction of CDW Corp i.e., CDW Corp and Katahdin Bankshares go up and down completely randomly.

Pair Corralation between CDW Corp and Katahdin Bankshares

Considering the 90-day investment horizon CDW Corp is expected to under-perform the Katahdin Bankshares. In addition to that, CDW Corp is 1.03 times more volatile than Katahdin Bankshares Corp. It trades about -0.18 of its total potential returns per unit of risk. Katahdin Bankshares Corp is currently generating about -0.04 per unit of volatility. If you would invest  2,500  in Katahdin Bankshares Corp on October 8, 2024 and sell it today you would lose (25.00) from holding Katahdin Bankshares Corp or give up 1.0% of portfolio value over 90 days.

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

CDW Corp  vs.  Katahdin Bankshares Corp

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 February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Katahdin Bankshares Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Katahdin Bankshares Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady technical indicators, Katahdin Bankshares displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CDW Corp and Katahdin Bankshares

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

The idea behind CDW Corp and Katahdin Bankshares Corp 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.

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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.