Correlation Between Kyndryl Holdings and CDW Corp

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

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

Diversification Opportunities for Kyndryl Holdings and CDW Corp

0.84

Correlation Coefficient

Kyndryl Holdings  CDW Corp

Very poor diversification

The 3 months correlation between Kyndryl and CDW is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Kyndryl Holdings and CDW Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDW Corp and Kyndryl Holdings 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 Kyndryl Holdings 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 Kyndryl Holdings i.e., Kyndryl Holdings and CDW Corp go up and down completely randomly.

Pair Corralation between Kyndryl Holdings and CDW Corp

Allowing for the 90-day total investment horizon Kyndryl Holdings is expected to generate 1.53 times more return on investment than CDW Corp. However, Kyndryl Holdings is 1.53 times more volatile than CDW Corp. It trades about 0.0 of its potential returns per unit of risk. CDW Corp is currently generating about -0.04 per unit of risk. If you would invest  3,483  in Kyndryl Holdings on December 27, 2024 and sell it today you would lose (77.00) from holding Kyndryl Holdings or give up 2.21% of portfolio value over 90 days.

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

Kyndryl Holdings  vs.  CDW Corp

Kyndryl Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kyndryl Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Kyndryl Holdings is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

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 Kyndryl Holdings and CDW Corp

The main advantage of trading using opposite Kyndryl Holdings and CDW Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kyndryl Holdings 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 Kyndryl Holdings 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.