Correlation Between EPAM Systems and DXC Technology
Can any of the company-specific risk be diversified away by investing in both EPAM Systems 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 EPAM Systems and DXC Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EPAM Systems and DXC Technology Co, you can compare the effects of market volatilities on EPAM Systems 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 EPAM Systems with a short position of DXC Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of EPAM Systems and DXC Technology.
Diversification Opportunities for EPAM Systems and DXC Technology
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between EPAM and DXC is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding EPAM Systems and DXC Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DXC Technology and EPAM Systems 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 EPAM Systems 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 EPAM Systems i.e., EPAM Systems and DXC Technology go up and down completely randomly.
Pair Corralation between EPAM Systems and DXC Technology
Given the investment horizon of 90 days EPAM Systems is expected to under-perform the DXC Technology. But the stock apears to be less risky and, when comparing its historical volatility, EPAM Systems is 1.61 times less risky than DXC Technology. The stock trades about -0.28 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 2,062 in DXC Technology Co on January 25, 2024 and sell it today you would earn a total of 41.00 from holding DXC Technology Co or generate 1.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
EPAM Systems vs. DXC Technology Co
Performance |
| Timeline |
| EPAM Systems |
| DXC Technology |
EPAM Systems and DXC Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EPAM Systems and DXC Technology
The main advantage of trading using opposite EPAM Systems and DXC Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EPAM Systems 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.| EPAM Systems vs. CACI International | EPAM Systems vs. CDW Corp | EPAM Systems vs. Jack Henry Associates | EPAM Systems vs. Broadridge Financial Solutions |
| DXC Technology vs. CACI International | DXC Technology vs. CDW Corp | DXC Technology vs. Jack Henry Associates | DXC Technology vs. Broadridge Financial Solutions |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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