Correlation Between DXC Technology and Home Depot
Can any of the company-specific risk be diversified away by investing in both DXC Technology and Home Depot 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 Home Depot 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 Home Depot, you can compare the effects of market volatilities on DXC Technology and Home Depot 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 Home Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of DXC Technology and Home Depot.
Diversification Opportunities for DXC Technology and Home Depot
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between DXC and Home is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding DXC Technology Co and Home Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Depot 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 Home Depot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Depot has no effect on the direction of DXC Technology i.e., DXC Technology and Home Depot go up and down completely randomly.
Pair Corralation between DXC Technology and Home Depot
Assuming the 90 days trading horizon DXC Technology Co is expected to under-perform the Home Depot. In addition to that, DXC Technology is 11.49 times more volatile than Home Depot. It trades about -0.01 of its total potential returns per unit of risk. Home Depot is currently generating about 0.09 per unit of volatility. If you would invest 16,579 in Home Depot on September 12, 2024 and sell it today you would earn a total of 1,278 from holding Home Depot or generate 7.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.49% |
| Values | Daily Returns |
DXC Technology Co vs. Home Depot
Performance |
| Timeline |
| DXC Technology |
| Home Depot |
DXC Technology and Home Depot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DXC Technology and Home Depot
The main advantage of trading using opposite DXC Technology and Home Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DXC Technology position performs unexpectedly, Home Depot 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 Home Depot will offset losses from the drop in Home Depot's long position.| DXC Technology vs. Hong Kong Land | DXC Technology vs. Neometals | DXC Technology vs. Coor Service Management | DXC Technology vs. Fidelity Sustainable USD |
| Home Depot vs. National Atomic Co | Home Depot vs. OTP Bank Nyrt | Home Depot vs. Samsung Electronics Co | Home Depot vs. Samsung Electronics Co |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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