Correlation Between STORE ELECTRONIC and CDW

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

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

Diversification Opportunities for STORE ELECTRONIC and CDW

-0.71

Correlation Coefficient

STORE ELECTRONIC  CDW

Pay attention - limited upside

The 3 months correlation between STORE and CDW is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding STORE ELECTRONIC and CDW Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDW Corporation and STORE ELECTRONIC 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 STORE ELECTRONIC 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 STORE ELECTRONIC i.e., STORE ELECTRONIC and CDW go up and down completely randomly.

Pair Corralation between STORE ELECTRONIC and CDW

Assuming the 90 days trading horizon STORE ELECTRONIC is expected to generate 2.17 times more return on investment than CDW. However, STORE ELECTRONIC is 2.17 times more volatile than CDW Corporation. It trades about 0.14 of its potential returns per unit of risk. CDW Corporation is currently generating about -0.07 per unit of risk. If you would invest  15,210  in STORE ELECTRONIC on December 20, 2024 and sell it today you would earn a total of  4,140  from holding STORE ELECTRONIC or generate 27.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

STORE ELECTRONIC  vs.  CDW Corp.

STORE ELECTRONIC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in STORE ELECTRONIC are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile primary indicators, STORE ELECTRONIC exhibited solid returns over the last few months and may actually be approaching a breakup point.

CDW Corporation

Risk-Adjusted Performance

Very Weak

Over the last 90 days CDW Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with STORE ELECTRONIC and CDW

The main advantage of trading using opposite STORE ELECTRONIC and CDW positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STORE ELECTRONIC 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 STORE ELECTRONIC 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.