Correlation Between ARB IOT and DXC Technology

Can any of the company-specific risk be diversified away by investing in both ARB IOT and DXC Technology 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 ARB IOT and DXC Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ARB IOT Group and DXC Technology Co, you can compare the effects of market volatilities on ARB IOT and DXC Technology 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 ARB IOT with a short position of DXC Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARB IOT and DXC Technology.

Diversification Opportunities for ARB IOT and DXC Technology

0.11

Correlation Coefficient

ARB IOT  DXC Technology

Average diversification

The 3 months correlation between ARB and DXC is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding ARB IOT Group and DXC Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DXC Technology and ARB IOT 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 ARB IOT Group are associated (or correlated) with DXC Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DXC Technology has no effect on the direction of ARB IOT i.e., ARB IOT and DXC Technology go up and down completely randomly.

Pair Corralation between ARB IOT and DXC Technology

Given the investment horizon of 90 days ARB IOT Group is expected to generate 4.88 times more return on investment than DXC Technology. However, ARB IOT is 4.88 times more volatile than DXC Technology Co. It trades about 0.0 of its potential returns per unit of risk. DXC Technology Co is currently generating about -0.02 per unit of risk. If you would invest  385.00  in ARB IOT Group on February 1, 2024 and sell it today you would lose (279.00) from holding ARB IOT Group or give up 72.47% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	68.62%
Values	Daily Returns

ARB IOT Group  vs.  DXC Technology Co

ARB IOT Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ARB IOT Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile fundamental drivers, ARB IOT sustained solid returns over the last few months and may actually be approaching a breakup point.

DXC Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DXC Technology Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with ARB IOT and DXC Technology

The main advantage of trading using opposite ARB IOT and DXC Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARB IOT position performs unexpectedly, DXC Technology 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 DXC Technology will offset losses from the drop in DXC Technology's long position.

The idea behind ARB IOT Group and DXC Technology Co 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.

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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.