Correlation Between DXC Technology and Automatic Data
Can any of the company-specific risk be diversified away by investing in both DXC Technology and Automatic Data 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 Automatic Data 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 Automatic Data Processing, you can compare the effects of market volatilities on DXC Technology and Automatic Data 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 Automatic Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of DXC Technology and Automatic Data.
Diversification Opportunities for DXC Technology and Automatic Data
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between DXC and Automatic is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding DXC Technology Co and Automatic Data Processing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automatic Data Processing 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 Automatic Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automatic Data Processing has no effect on the direction of DXC Technology i.e., DXC Technology and Automatic Data go up and down completely randomly.
Pair Corralation between DXC Technology and Automatic Data
Assuming the 90 days trading horizon DXC Technology Co is expected to generate 2.55 times more return on investment than Automatic Data. However, DXC Technology is 2.55 times more volatile than Automatic Data Processing. It trades about 0.18 of its potential returns per unit of risk. Automatic Data Processing is currently generating about 0.24 per unit of risk. If you would invest 1,997 in DXC Technology Co on September 2, 2024 and sell it today you would earn a total of 244.00 from holding DXC Technology Co or generate 12.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DXC Technology Co vs. Automatic Data Processing
Performance |
| Timeline |
| DXC Technology |
| Automatic Data Processing |
DXC Technology and Automatic Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DXC Technology and Automatic Data
The main advantage of trading using opposite DXC Technology and Automatic Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DXC Technology position performs unexpectedly, Automatic Data 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 Automatic Data will offset losses from the drop in Automatic Data's long position.| DXC Technology vs. Uniper SE | DXC Technology vs. Mulberry Group PLC | DXC Technology vs. London Security Plc | DXC Technology vs. Triad Group PLC |
| Automatic Data vs. National Beverage Corp | Automatic Data vs. Infrastrutture Wireless Italiane | Automatic Data vs. Broadcom | Automatic Data vs. Gaztransport et Technigaz |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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