Correlation Between CDW Corp and Pinterest

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

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

Diversification Opportunities for CDW Corp and Pinterest

0.6

Correlation Coefficient

CDW Corp  Pinterest

Poor diversification

The 3 months correlation between CDW and Pinterest is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding CDW Corp and Pinterest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinterest 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 Pinterest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pinterest has no effect on the direction of CDW Corp i.e., CDW Corp and Pinterest go up and down completely randomly.

Pair Corralation between CDW Corp and Pinterest

Considering the 90-day investment horizon CDW Corp is expected to generate 8.39 times less return on investment than Pinterest. But when comparing it to its historical volatility, CDW Corp is 1.61 times less risky than Pinterest. It trades about 0.01 of its potential returns per unit of risk. Pinterest is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,923  in Pinterest on September 21, 2024 and sell it today you would earn a total of  51.50  from holding Pinterest or generate 1.76% return on investment over 90 days.

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

CDW Corp  vs.  Pinterest

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 weak 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.

Pinterest

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pinterest has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Pinterest is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with CDW Corp and Pinterest

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

The idea behind CDW Corp and Pinterest 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.