Correlation Between CDW Corp and Energy East

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

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

Diversification Opportunities for CDW Corp and Energy East

0.0

Correlation Coefficient

CDW Corp  Energy East

Pay attention - limited upside

The 3 months correlation between CDW and Energy is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CDW Corp and Energy East Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy East Corp 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 Energy East. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy East Corp has no effect on the direction of CDW Corp i.e., CDW Corp and Energy East go up and down completely randomly.

Pair Corralation between CDW Corp and Energy East

If you would invest (100.00) in Energy East Corp on September 23, 2024 and sell it today you would earn a total of  100.00  from holding Energy East Corp or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

CDW Corp  vs.  Energy East Corp

CDW Corp

Risk-Adjusted Performance

0 of 100

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 inconsistent performance in the last few months, the Stock's fundamental indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Energy East Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Energy East Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Energy East is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with CDW Corp and Energy East

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

The idea behind CDW Corp and Energy East 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.