Correlation Between DXC Technology and Summit Materials
Can any of the company-specific risk be diversified away by investing in both DXC Technology and Summit Materials 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 Summit Materials 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 Summit Materials Cl, you can compare the effects of market volatilities on DXC Technology and Summit Materials 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 Summit Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of DXC Technology and Summit Materials.
Diversification Opportunities for DXC Technology and Summit Materials
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between DXC and Summit is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding DXC Technology Co and Summit Materials Cl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials 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 Summit Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Materials has no effect on the direction of DXC Technology i.e., DXC Technology and Summit Materials go up and down completely randomly.
Pair Corralation between DXC Technology and Summit Materials
Assuming the 90 days trading horizon DXC Technology is expected to generate 23.03 times less return on investment than Summit Materials. In addition to that, DXC Technology is 1.18 times more volatile than Summit Materials Cl. It trades about 0.0 of its total potential returns per unit of risk. Summit Materials Cl is currently generating about 0.06 per unit of volatility. If you would invest 3,155 in Summit Materials Cl on September 2, 2024 and sell it today you would earn a total of 1,946 from holding Summit Materials Cl or generate 61.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 91.84% |
| Values | Daily Returns |
DXC Technology Co vs. Summit Materials Cl
Performance |
| Timeline |
| DXC Technology |
| Summit Materials |
DXC Technology and Summit Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DXC Technology and Summit Materials
The main advantage of trading using opposite DXC Technology and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DXC Technology position performs unexpectedly, Summit Materials 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 Summit Materials will offset losses from the drop in Summit Materials' 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 |
| Summit Materials vs. Uniper SE | Summit Materials vs. Mulberry Group PLC | Summit Materials vs. London Security Plc | Summit Materials vs. Triad Group PLC |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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