Correlation Between Digimarc and DXC Technology
Can any of the company-specific risk be diversified away by investing in both Digimarc 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 Digimarc and DXC Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Digimarc and DXC Technology Co, you can compare the effects of market volatilities on Digimarc 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 Digimarc with a short position of DXC Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digimarc and DXC Technology.
Diversification Opportunities for Digimarc and DXC Technology
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Digimarc and DXC is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Digimarc and DXC Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DXC Technology and Digimarc 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 Digimarc 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 Digimarc i.e., Digimarc and DXC Technology go up and down completely randomly.
Pair Corralation between Digimarc and DXC Technology
Given the investment horizon of 90 days Digimarc is expected to under-perform the DXC Technology. But the stock apears to be less risky and, when comparing its historical volatility, Digimarc is 1.4 times less risky than DXC Technology. The stock trades about -0.63 of its potential returns per unit of risk. The DXC Technology Co is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 2,106 in DXC Technology Co on January 27, 2024 and sell it today you would lose (69.00) from holding DXC Technology Co or give up 3.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Digimarc vs. DXC Technology Co
Performance |
| Timeline |
| Digimarc |
| DXC Technology |
Digimarc and DXC Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digimarc and DXC Technology
The main advantage of trading using opposite Digimarc and DXC Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digimarc 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.| Digimarc vs. VNET Group DRC | Digimarc vs. GDS Holdings | Digimarc vs. CLARIVATE PLC | Digimarc vs. CACI International |
| 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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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