Correlation Between Genpact and CDW Corp
Can any of the company-specific risk be diversified away by investing in both Genpact and CDW Corp 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 Genpact and CDW Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Genpact Limited and CDW Corp, you can compare the effects of market volatilities on Genpact and CDW Corp 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 Genpact with a short position of CDW Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genpact and CDW Corp.
Diversification Opportunities for Genpact and CDW Corp
Very good diversification
The 3 months correlation between Genpact and CDW is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Genpact Limited and CDW Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDW Corp and Genpact 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 Genpact Limited are associated (or correlated) with CDW Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDW Corp has no effect on the direction of Genpact i.e., Genpact and CDW Corp go up and down completely randomly.
Pair Corralation between Genpact and CDW Corp
Taking into account the 90-day investment horizon Genpact Limited is expected to under-perform the CDW Corp. But the stock apears to be less risky and, when comparing its historical volatility, Genpact Limited is 1.06 times less risky than CDW Corp. The stock trades about -0.02 of its potential returns per unit of risk. The CDW Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 16,665 in CDW Corp on January 26, 2024 and sell it today you would earn a total of 7,404 from holding CDW Corp or generate 44.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Genpact Limited vs. CDW Corp
Performance |
| Timeline |
| Genpact Limited |
| CDW Corp |
Genpact and CDW Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Genpact and CDW Corp
The main advantage of trading using opposite Genpact and CDW Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genpact position performs unexpectedly, CDW Corp 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 Corp will offset losses from the drop in CDW Corp's long position.| Genpact vs. ASGN Inc | Genpact vs. Formula Systems 1985 | Genpact vs. FiscalNote Holdings | Genpact vs. International Business Machines |
Check out your portfolio center.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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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