Correlation Between CDW Corp and Pekin Life

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

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

Diversification Opportunities for CDW Corp and Pekin Life

-0.81

Correlation Coefficient

CDW Corp  Pekin Life

Pay attention - limited upside

The 3 months correlation between CDW and Pekin is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding CDW Corp and Pekin Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pekin Life Insurance 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 Pekin Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pekin Life Insurance has no effect on the direction of CDW Corp i.e., CDW Corp and Pekin Life go up and down completely randomly.

Pair Corralation between CDW Corp and Pekin Life

Considering the 90-day investment horizon CDW Corp is expected to under-perform the Pekin Life. In addition to that, CDW Corp is 4.67 times more volatile than Pekin Life Insurance. It trades about -0.24 of its total potential returns per unit of risk. Pekin Life Insurance is currently generating about 0.16 per unit of volatility. If you would invest  1,152  in Pekin Life Insurance on October 7, 2024 and sell it today you would earn a total of  23.00  from holding Pekin Life Insurance or generate 2.0% return on investment over 90 days.

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

CDW Corp  vs.  Pekin Life Insurance

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.

Pekin Life Insurance

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pekin Life Insurance are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Pekin Life is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with CDW Corp and Pekin Life

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

The idea behind CDW Corp and Pekin Life Insurance 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.