Correlation Between DXC Technology and HCA Healthcare
Can any of the company-specific risk be diversified away by investing in both DXC Technology and HCA Healthcare 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 HCA Healthcare 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 HCA Healthcare, you can compare the effects of market volatilities on DXC Technology and HCA Healthcare 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 HCA Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of DXC Technology and HCA Healthcare.
Diversification Opportunities for DXC Technology and HCA Healthcare
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between DXC and HCA is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding DXC Technology Co and HCA Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HCA Healthcare 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 HCA Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HCA Healthcare has no effect on the direction of DXC Technology i.e., DXC Technology and HCA Healthcare go up and down completely randomly.
Pair Corralation between DXC Technology and HCA Healthcare
Assuming the 90 days trading horizon DXC Technology Co is expected to under-perform the HCA Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, DXC Technology Co is 3.01 times less risky than HCA Healthcare. The stock trades about 0.0 of its potential returns per unit of risk. The HCA Healthcare is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 23,280 in HCA Healthcare on August 26, 2024 and sell it today you would earn a total of 9,584 from holding HCA Healthcare or generate 41.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.39% |
| Values | Daily Returns |
DXC Technology Co vs. HCA Healthcare
Performance |
| Timeline |
| DXC Technology |
| HCA Healthcare |
DXC Technology and HCA Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DXC Technology and HCA Healthcare
The main advantage of trading using opposite DXC Technology and HCA Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DXC Technology position performs unexpectedly, HCA Healthcare 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 HCA Healthcare will offset losses from the drop in HCA Healthcare's long position.| DXC Technology vs. Samsung Electronics Co | DXC Technology vs. Samsung Electronics Co | DXC Technology vs. Hyundai Motor | DXC Technology vs. Toyota Motor Corp |
| HCA Healthcare vs. Samsung Electronics Co | HCA Healthcare vs. Samsung Electronics Co | HCA Healthcare vs. Hyundai Motor | HCA Healthcare vs. Toyota Motor Corp |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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