Correlation Between Parsons Corp and DXC Technology

Can any of the company-specific risk be diversified away by investing in both Parsons Corp 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 Parsons Corp and DXC Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Parsons Corp and DXC Technology Co, you can compare the effects of market volatilities on Parsons Corp 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 Parsons Corp with a short position of DXC Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parsons Corp and DXC Technology.

Diversification Opportunities for Parsons Corp and DXC Technology

0.51

Correlation Coefficient

Parsons Corp  DXC Technology

Very weak diversification

The 3 months correlation between Parsons and DXC is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Parsons Corp and DXC Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DXC Technology and Parsons Corp 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 Parsons Corp 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 Parsons Corp i.e., Parsons Corp and DXC Technology go up and down completely randomly.

Pair Corralation between Parsons Corp and DXC Technology

Considering the 90-day investment horizon Parsons Corp is expected to generate 0.86 times more return on investment than DXC Technology. However, Parsons Corp is 1.16 times less risky than DXC Technology. It trades about -0.1 of its potential returns per unit of risk. DXC Technology Co is currently generating about -0.14 per unit of risk. If you would invest  7,736  in Parsons Corp on February 3, 2025 and sell it today you would lose (1,455) from holding Parsons Corp or give up 18.81% of portfolio value over 90 days.

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

Parsons Corp  vs.  DXC Technology Co

Parsons Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Parsons Corp 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 very healthy which may send shares a bit higher in June 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

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

Pair Trading with Parsons Corp and DXC Technology

The main advantage of trading using opposite Parsons Corp and DXC Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parsons Corp 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.

The idea behind Parsons Corp and DXC Technology Co 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.

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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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.