Correlation Between DXC Technology and Host Hotels
Can any of the company-specific risk be diversified away by investing in both DXC Technology and Host Hotels 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 Host Hotels 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 Host Hotels Resorts, you can compare the effects of market volatilities on DXC Technology and Host Hotels 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 Host Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of DXC Technology and Host Hotels.
Diversification Opportunities for DXC Technology and Host Hotels
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between DXC and Host is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding DXC Technology Co and Host Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Host Hotels Resorts 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 Host Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Host Hotels Resorts has no effect on the direction of DXC Technology i.e., DXC Technology and Host Hotels go up and down completely randomly.
Pair Corralation between DXC Technology and Host Hotels
Assuming the 90 days trading horizon DXC Technology Co is expected to under-perform the Host Hotels. In addition to that, DXC Technology is 1.69 times more volatile than Host Hotels Resorts. It trades about -0.01 of its total potential returns per unit of risk. Host Hotels Resorts is currently generating about 0.02 per unit of volatility. If you would invest 1,474 in Host Hotels Resorts on November 29, 2024 and sell it today you would earn a total of 151.00 from holding Host Hotels Resorts or generate 10.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 96.21% |
| Values | Daily Returns |
DXC Technology Co vs. Host Hotels Resorts
Performance |
| Timeline |
| DXC Technology |
| Host Hotels Resorts |
DXC Technology and Host Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DXC Technology and Host Hotels
The main advantage of trading using opposite DXC Technology and Host Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DXC Technology position performs unexpectedly, Host Hotels 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 Host Hotels will offset losses from the drop in Host Hotels' long position.| DXC Technology vs. Caledonia Mining | DXC Technology vs. Fulcrum Metals PLC | DXC Technology vs. Power Metal Resources | DXC Technology vs. Fortuna Silver Mines |
| Host Hotels vs. Bigblu Broadband PLC | Host Hotels vs. Teradata Corp | Host Hotels vs. Gaztransport et Technigaz | Host Hotels vs. Extra Space Storage |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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