Correlation Between DXC Technology and Emergent Biosolutions
Can any of the company-specific risk be diversified away by investing in both DXC Technology and Emergent Biosolutions 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 Emergent Biosolutions 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 Emergent Biosolutions, you can compare the effects of market volatilities on DXC Technology and Emergent Biosolutions 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 Emergent Biosolutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of DXC Technology and Emergent Biosolutions.
Diversification Opportunities for DXC Technology and Emergent Biosolutions
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between DXC and Emergent is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding DXC Technology Co and Emergent Biosolutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emergent Biosolutions 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 Emergent Biosolutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emergent Biosolutions has no effect on the direction of DXC Technology i.e., DXC Technology and Emergent Biosolutions go up and down completely randomly.
Pair Corralation between DXC Technology and Emergent Biosolutions
Assuming the 90 days trading horizon DXC Technology Co is expected to under-perform the Emergent Biosolutions. But the stock apears to be less risky and, when comparing its historical volatility, DXC Technology Co is 2.83 times less risky than Emergent Biosolutions. The stock trades about -0.32 of its potential returns per unit of risk. The Emergent Biosolutions is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 892.00 in Emergent Biosolutions on October 9, 2024 and sell it today you would earn a total of 130.00 from holding Emergent Biosolutions or generate 14.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
DXC Technology Co vs. Emergent Biosolutions
Performance |
| Timeline |
| DXC Technology |
| Emergent Biosolutions |
DXC Technology and Emergent Biosolutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DXC Technology and Emergent Biosolutions
The main advantage of trading using opposite DXC Technology and Emergent Biosolutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DXC Technology position performs unexpectedly, Emergent Biosolutions 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 Emergent Biosolutions will offset losses from the drop in Emergent Biosolutions' long position.| DXC Technology vs. UNIQA Insurance Group | DXC Technology vs. Sparebank 1 SR | DXC Technology vs. FinecoBank SpA | DXC Technology vs. Tetragon Financial Group |
| Emergent Biosolutions vs. Walmart | Emergent Biosolutions vs. BYD Co | Emergent Biosolutions vs. Volkswagen AG | Emergent Biosolutions vs. Volkswagen AG Non Vtg |
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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