Correlation Between DXC Technology and Touchstone Ultra

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

Diversification Opportunities for DXC Technology and Touchstone Ultra

-0.03

Correlation Coefficient

DXC Technology  Touchstone Ultra

Good diversification

The 3 months correlation between DXC and Touchstone is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding DXC Technology Co and Touchstone Ultra Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Ultra Short 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 Touchstone Ultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Ultra Short has no effect on the direction of DXC Technology i.e., DXC Technology and Touchstone Ultra go up and down completely randomly.

Pair Corralation between DXC Technology and Touchstone Ultra

Considering the 90-day investment horizon DXC Technology Co is expected to generate 30.15 times more return on investment than Touchstone Ultra. However, DXC Technology is 30.15 times more volatile than Touchstone Ultra Short. It trades about 0.03 of its potential returns per unit of risk. Touchstone Ultra Short is currently generating about 0.21 per unit of risk. If you would invest  1,403  in DXC Technology Co on April 20, 2025 and sell it today you would earn a total of  36.00  from holding DXC Technology Co or generate 2.57% return on investment over 90 days.

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

DXC Technology Co  vs.  Touchstone Ultra Short

DXC Technology

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in DXC Technology Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, DXC Technology is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Touchstone Ultra Short

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Touchstone Ultra Short are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Touchstone Ultra is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with DXC Technology and Touchstone Ultra

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

The idea behind DXC Technology Co and Touchstone Ultra Short 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.