Correlation Between CDK Global and International Business
Can any of the company-specific risk be diversified away by investing in both CDK Global and International Business 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 CDK Global and International Business into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CDK Global Holdings and International Business Machines, you can compare the effects of market volatilities on CDK Global and International Business 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 CDK Global with a short position of International Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of CDK Global and International Business.
Diversification Opportunities for CDK Global and International Business
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between CDK and International is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding CDK Global Holdings and International Business Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Business and CDK Global 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 CDK Global Holdings are associated (or correlated) with International Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Business has no effect on the direction of CDK Global i.e., CDK Global and International Business go up and down completely randomly.
Pair Corralation between CDK Global and International Business
If you would invest 5,476 in CDK Global Holdings on January 25, 2024 and sell it today you would earn a total of 0.00 from holding CDK Global Holdings or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 4.55% |
| Values | Daily Returns |
CDK Global Holdings vs. International Business Machine
Performance |
| Timeline |
| CDK Global Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| International Business |
CDK Global and International Business Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CDK Global and International Business
The main advantage of trading using opposite CDK Global and International Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDK Global position performs unexpectedly, International Business 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 International Business will offset losses from the drop in International Business' long position.| CDK Global vs. Worthington Steel | CDK Global vs. Insteel Industries | CDK Global vs. CECO Environmental Corp | CDK Global vs. Bank of New |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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