Correlation Between DXC Technology and Clearway Energy

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

Diversification Opportunities for DXC Technology and Clearway Energy

-0.51

Correlation Coefficient

DXC Technology  Clearway Energy

Excellent diversification

The 3 months correlation between DXC and Clearway is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding DXC Technology Co and Clearway Energy Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearway Energy Class 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 Clearway Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearway Energy Class has no effect on the direction of DXC Technology i.e., DXC Technology and Clearway Energy go up and down completely randomly.

Pair Corralation between DXC Technology and Clearway Energy

Considering the 90-day investment horizon DXC Technology Co is expected to under-perform the Clearway Energy. In addition to that, DXC Technology is 1.73 times more volatile than Clearway Energy Class. It trades about -0.09 of its total potential returns per unit of risk. Clearway Energy Class is currently generating about 0.15 per unit of volatility. If you would invest  2,837  in Clearway Energy Class on May 2, 2025 and sell it today you would earn a total of  371.00  from holding Clearway Energy Class or generate 13.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

DXC Technology Co  vs.  Clearway Energy Class

DXC Technology

Risk-Adjusted Performance

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 uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in August 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Clearway Energy Class

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Clearway Energy Class are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Clearway Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DXC Technology and Clearway Energy

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

The idea behind DXC Technology Co and Clearway Energy Class 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.