Correlation Between DXC Technology and Leggett Platt
Can any of the company-specific risk be diversified away by investing in both DXC Technology and Leggett Platt 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 Leggett Platt 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 Leggett Platt, you can compare the effects of market volatilities on DXC Technology and Leggett Platt 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 Leggett Platt. Check out your portfolio center. Please also check ongoing floating volatility patterns of DXC Technology and Leggett Platt.
Diversification Opportunities for DXC Technology and Leggett Platt
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DXC and Leggett is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding DXC Technology Co and Leggett Platt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leggett Platt 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 Leggett Platt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leggett Platt has no effect on the direction of DXC Technology i.e., DXC Technology and Leggett Platt go up and down completely randomly.
Pair Corralation between DXC Technology and Leggett Platt
Assuming the 90 days trading horizon DXC Technology is expected to generate 1.22 times less return on investment than Leggett Platt. But when comparing it to its historical volatility, DXC Technology Co is 1.49 times less risky than Leggett Platt. It trades about 0.25 of its potential returns per unit of risk. Leggett Platt is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 968.00 in Leggett Platt on November 3, 2024 and sell it today you would earn a total of 106.00 from holding Leggett Platt or generate 10.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DXC Technology Co vs. Leggett Platt
Performance |
| Timeline |
| DXC Technology |
| Leggett Platt |
DXC Technology and Leggett Platt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DXC Technology and Leggett Platt
The main advantage of trading using opposite DXC Technology and Leggett Platt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DXC Technology position performs unexpectedly, Leggett Platt 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 Leggett Platt will offset losses from the drop in Leggett Platt's long position.| DXC Technology vs. PPHE Hotel Group | DXC Technology vs. InterContinental Hotels Group | DXC Technology vs. Arrow Electronics | DXC Technology vs. Primary Health Properties |
| Leggett Platt vs. Software Circle plc | Leggett Platt vs. Monster Beverage Corp | Leggett Platt vs. Impax Asset Management | Leggett Platt vs. Coor Service Management |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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