Correlation Between DXC Technology and International Business
Can any of the company-specific risk be diversified away by investing in both DXC Technology 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 DXC Technology and International Business 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 International Business Machines, you can compare the effects of market volatilities on DXC Technology 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 DXC Technology with a short position of International Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of DXC Technology and International Business.
Diversification Opportunities for DXC Technology and International Business
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between DXC and International is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding DXC Technology Co and International Business Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Business 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 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 DXC Technology i.e., DXC Technology and International Business go up and down completely randomly.
Pair Corralation between DXC Technology and International Business
Considering the 90-day investment horizon DXC Technology is expected to generate 19.29 times less return on investment than International Business. In addition to that, DXC Technology is 1.66 times more volatile than International Business Machines. It trades about 0.01 of its total potential returns per unit of risk. International Business Machines is currently generating about 0.19 per unit of volatility. If you would invest 13,440 in International Business Machines on January 18, 2024 and sell it today you would earn a total of 4,935 from holding International Business Machines or generate 36.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.19% |
| Values | Daily Returns |
DXC Technology Co vs. International Business Machine
Performance |
| Timeline |
| DXC Technology |
| International Business |
DXC Technology and International Business Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DXC Technology and International Business
The main advantage of trading using opposite DXC Technology and International Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DXC Technology 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.| DXC Technology vs. Globant SA | DXC Technology vs. Concentrix | DXC Technology vs. CDW Corp | DXC Technology vs. BigBearai Holdings |
| International Business vs. Globant SA | International Business vs. Concentrix | International Business vs. CDW Corp | International Business vs. BigBearai Holdings |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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