Correlation Between DXC Technology and NextTrip

Can any of the company-specific risk be diversified away by investing in both DXC Technology and NextTrip 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 NextTrip 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 NextTrip, you can compare the effects of market volatilities on DXC Technology and NextTrip 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 NextTrip. Check out your portfolio center. Please also check ongoing floating volatility patterns of DXC Technology and NextTrip.

Diversification Opportunities for DXC Technology and NextTrip

-0.06

Correlation Coefficient

DXC Technology  NextTrip

Good diversification

The 3 months correlation between DXC and NextTrip is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding DXC Technology Co and NextTrip in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NextTrip 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 NextTrip. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NextTrip has no effect on the direction of DXC Technology i.e., DXC Technology and NextTrip go up and down completely randomly.

Pair Corralation between DXC Technology and NextTrip

Considering the 90-day investment horizon DXC Technology Co is expected to under-perform the NextTrip. But the stock apears to be less risky and, when comparing its historical volatility, DXC Technology Co is 15.92 times less risky than NextTrip. The stock trades about -0.01 of its potential returns per unit of risk. The NextTrip is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  108.00  in NextTrip on January 29, 2024 and sell it today you would earn a total of  169.00  from holding NextTrip or generate 156.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

DXC Technology Co  vs.  NextTrip

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.

NextTrip

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NextTrip has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest fragile performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with DXC Technology and NextTrip

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

The idea behind DXC Technology Co and NextTrip 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.

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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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.