Correlation Between CDW Corp and WELLTOWER

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

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

Diversification Opportunities for CDW Corp and WELLTOWER

0.28

Correlation Coefficient

CDW Corp  WELLTOWER

Modest diversification

The 3 months correlation between CDW and WELLTOWER is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding CDW Corp and WELLTOWER INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WELLTOWER INC 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 WELLTOWER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WELLTOWER INC has no effect on the direction of CDW Corp i.e., CDW Corp and WELLTOWER go up and down completely randomly.

Pair Corralation between CDW Corp and WELLTOWER

Considering the 90-day investment horizon CDW Corp is expected to under-perform the WELLTOWER. In addition to that, CDW Corp is 2.4 times more volatile than WELLTOWER INC. It trades about -0.06 of its total potential returns per unit of risk. WELLTOWER INC is currently generating about -0.08 per unit of volatility. If you would invest  8,736  in WELLTOWER INC on December 30, 2024 and sell it today you would lose (298.00) from holding WELLTOWER INC or give up 3.41% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

CDW Corp  vs.  WELLTOWER INC

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.

WELLTOWER INC

Risk-Adjusted Performance

Very Weak

Over the last 90 days WELLTOWER INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, WELLTOWER is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CDW Corp and WELLTOWER

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

The idea behind CDW Corp and WELLTOWER INC 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 Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..