Correlation Between Jack Henry and CDW Corp

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

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

Diversification Opportunities for Jack Henry and CDW Corp

-0.48

Correlation Coefficient

Jack Henry  CDW Corp

Very good diversification

The 3 months correlation between Jack and CDW is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Jack Henry Associates and CDW Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDW Corp and Jack Henry 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 Jack Henry Associates are associated (or correlated) with CDW Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDW Corp has no effect on the direction of Jack Henry i.e., Jack Henry and CDW Corp go up and down completely randomly.

Pair Corralation between Jack Henry and CDW Corp

Given the investment horizon of 90 days Jack Henry Associates is expected to generate 0.93 times more return on investment than CDW Corp. However, Jack Henry Associates is 1.07 times less risky than CDW Corp. It trades about 0.02 of its potential returns per unit of risk. CDW Corp is currently generating about -0.04 per unit of risk. If you would invest  17,693  in Jack Henry Associates on December 26, 2024 and sell it today you would earn a total of  246.00  from holding Jack Henry Associates or generate 1.39% return on investment over 90 days.

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

Jack Henry Associates  vs.  CDW Corp

Jack Henry Associates

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Jack Henry Associates are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical indicators, Jack Henry is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with Jack Henry and CDW Corp

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

The idea behind Jack Henry Associates and CDW 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.

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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.