Correlation Between RCM TECHNOLOGIES and CDW

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

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

Diversification Opportunities for RCM TECHNOLOGIES and CDW

-0.83

Correlation Coefficient

RCM TECHNOLOGIES  CDW

Pay attention - limited upside

The 3 months correlation between RCM and CDW is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding RCM TECHNOLOGIES and CDW Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDW Corporation and RCM TECHNOLOGIES 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 RCM TECHNOLOGIES are associated (or correlated) with CDW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDW Corporation has no effect on the direction of RCM TECHNOLOGIES i.e., RCM TECHNOLOGIES and CDW go up and down completely randomly.

Pair Corralation between RCM TECHNOLOGIES and CDW

Assuming the 90 days trading horizon RCM TECHNOLOGIES is expected to generate 1.68 times more return on investment than CDW. However, RCM TECHNOLOGIES is 1.68 times more volatile than CDW Corporation. It trades about 0.22 of its potential returns per unit of risk. CDW Corporation is currently generating about -0.06 per unit of risk. If you would invest  2,000  in RCM TECHNOLOGIES on September 23, 2024 and sell it today you would earn a total of  160.00  from holding RCM TECHNOLOGIES or generate 8.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	77.27%
Values	Daily Returns

RCM TECHNOLOGIES  vs.  CDW Corp.

RCM TECHNOLOGIES

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in RCM TECHNOLOGIES are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, RCM TECHNOLOGIES exhibited solid returns over the last few months and may actually be approaching a breakup point.

CDW Corporation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CDW Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with RCM TECHNOLOGIES and CDW

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

The idea behind RCM TECHNOLOGIES and CDW Corporation 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.