Correlation Between CDW Corp and MACYS

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

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

Diversification Opportunities for CDW Corp and MACYS

0.44

Correlation Coefficient

CDW Corp  MACYS

Very weak diversification

The 3 months correlation between CDW and MACYS is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding CDW Corp and MACYS RETAIL HLDGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MACYS RETAIL HLDGS 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 MACYS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MACYS RETAIL HLDGS has no effect on the direction of CDW Corp i.e., CDW Corp and MACYS go up and down completely randomly.

Pair Corralation between CDW Corp and MACYS

Considering the 90-day investment horizon CDW Corp is expected to under-perform the MACYS. In addition to that, CDW Corp is 1.37 times more volatile than MACYS RETAIL HLDGS. It trades about -0.08 of its total potential returns per unit of risk. MACYS RETAIL HLDGS is currently generating about 0.01 per unit of volatility. If you would invest  10,083  in MACYS RETAIL HLDGS on September 30, 2024 and sell it today you would earn a total of  27.00  from holding MACYS RETAIL HLDGS or generate 0.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	92.86%
Values	Daily Returns

CDW Corp  vs.  MACYS RETAIL HLDGS

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 uncertain 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.

MACYS RETAIL HLDGS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MACYS RETAIL HLDGS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, MACYS is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CDW Corp and MACYS

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

The idea behind CDW Corp and MACYS RETAIL HLDGS 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 Valuation module to check real value of public entities based on technical and fundamental data.