Correlation Between International Business and DXC Technology
Can any of the company-specific risk be diversified away by investing in both International Business 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 International Business and DXC Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Business Machines and DXC Technology Co, you can compare the effects of market volatilities on International Business 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 International Business with a short position of DXC Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Business and DXC Technology.
Diversification Opportunities for International Business and DXC Technology
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between International and DXC is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and DXC Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DXC Technology and International Business 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 International Business Machines 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 International Business i.e., International Business and DXC Technology go up and down completely randomly.
Pair Corralation between International Business and DXC Technology
Considering the 90-day investment horizon International Business Machines is expected to under-perform the DXC Technology. But the stock apears to be less risky and, when comparing its historical volatility, International Business Machines is 1.15 times less risky than DXC Technology. The stock trades about -0.24 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 2,064 in DXC Technology Co on January 26, 2024 and sell it today you would earn a total of 39.00 from holding DXC Technology Co or generate 1.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
International Business Machine vs. DXC Technology Co
Performance |
| Timeline |
| International Business |
| DXC Technology |
International Business and DXC Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Business and DXC Technology
The main advantage of trading using opposite International Business and DXC Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Business 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.| International Business vs. FiscalNote Holdings | International Business vs. Innodata | International Business vs. Aurora Innovation | International Business vs. Conduent |
| 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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