Correlation Between CDW Corp and ExlService Holdings

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Can any of the company-specific risk be diversified away by investing in both CDW Corp and ExlService Holdings 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 ExlService Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CDW Corp and ExlService Holdings, you can compare the effects of market volatilities on CDW Corp and ExlService Holdings 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 ExlService Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of CDW Corp and ExlService Holdings.

Diversification Opportunities for CDW Corp and ExlService Holdings

0.07
  Correlation Coefficient

Significant diversification

The 3 months correlation between CDW and ExlService is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding CDW Corp and ExlService Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ExlService Holdings 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 ExlService Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ExlService Holdings has no effect on the direction of CDW Corp i.e., CDW Corp and ExlService Holdings go up and down completely randomly.

Pair Corralation between CDW Corp and ExlService Holdings

Considering the 90-day investment horizon CDW Corp is expected to generate 0.33 times more return on investment than ExlService Holdings. However, CDW Corp is 3.06 times less risky than ExlService Holdings. It trades about 0.35 of its potential returns per unit of risk. ExlService Holdings is currently generating about 0.08 per unit of risk. If you would invest  24,427  in CDW Corp on December 29, 2023 and sell it today you would earn a total of  1,360  from holding CDW Corp or generate 5.57% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

CDW Corp  vs.  ExlService Holdings

 Performance 
       Timeline  
CDW Corp 

Risk-Adjusted Performance

14 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in CDW Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady fundamental indicators, CDW Corp showed solid returns over the last few months and may actually be approaching a breakup point.
ExlService Holdings 

Risk-Adjusted Performance

1 of 100

 
Low
 
High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in ExlService Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, ExlService Holdings is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

CDW Corp and ExlService Holdings Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with CDW Corp and ExlService Holdings

The main advantage of trading using opposite CDW Corp and ExlService Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDW Corp position performs unexpectedly, ExlService Holdings 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 ExlService Holdings will offset losses from the drop in ExlService Holdings' long position.
The idea behind CDW Corp and ExlService Holdings 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.

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