Correlation Between DXC Technology and CGI
Can any of the company-specific risk be diversified away by investing in both DXC Technology and CGI 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 DXC Technology and CGI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DXC Technology Co and CGI Inc, you can compare the effects of market volatilities on DXC Technology and CGI 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 DXC Technology with a short position of CGI. Check out your portfolio center. Please also check ongoing floating volatility patterns of DXC Technology and CGI.
Diversification Opportunities for DXC Technology and CGI
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between DXC and CGI is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding DXC Technology Co and CGI Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CGI Inc and DXC Technology 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 DXC Technology Co are associated (or correlated) with CGI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CGI Inc has no effect on the direction of DXC Technology i.e., DXC Technology and CGI go up and down completely randomly.
Pair Corralation between DXC Technology and CGI
Considering the 90-day investment horizon DXC Technology Co is expected to under-perform the CGI. In addition to that, DXC Technology is 2.16 times more volatile than CGI Inc. It trades about -0.01 of its total potential returns per unit of risk. CGI Inc is currently generating about 0.05 per unit of volatility. If you would invest 7,950 in CGI Inc on January 26, 2024 and sell it today you would earn a total of 2,579 from holding CGI Inc or generate 32.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
DXC Technology Co vs. CGI Inc
Performance |
| Timeline |
| DXC Technology |
| CGI Inc |
DXC Technology and CGI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DXC Technology and CGI
The main advantage of trading using opposite DXC Technology and CGI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DXC Technology position performs unexpectedly, CGI 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 CGI will offset losses from the drop in CGI's long position.| DXC Technology vs. FiscalNote Holdings | DXC Technology vs. Innodata | DXC Technology vs. Aurora Innovation | DXC Technology vs. Conduent |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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