Correlation Between DXC Technology and Ashtead Group
Can any of the company-specific risk be diversified away by investing in both DXC Technology and Ashtead Group 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 Ashtead Group 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 Ashtead Group PLC, you can compare the effects of market volatilities on DXC Technology and Ashtead Group 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 Ashtead Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of DXC Technology and Ashtead Group.
Diversification Opportunities for DXC Technology and Ashtead Group
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between DXC and Ashtead is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding DXC Technology Co and Ashtead Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashtead Group PLC 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 Ashtead Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashtead Group PLC has no effect on the direction of DXC Technology i.e., DXC Technology and Ashtead Group go up and down completely randomly.
Pair Corralation between DXC Technology and Ashtead Group
Assuming the 90 days trading horizon DXC Technology is expected to generate 9.86 times less return on investment than Ashtead Group. In addition to that, DXC Technology is 1.47 times more volatile than Ashtead Group PLC. It trades about 0.0 of its total potential returns per unit of risk. Ashtead Group PLC is currently generating about 0.04 per unit of volatility. If you would invest 480,623 in Ashtead Group PLC on September 4, 2024 and sell it today you would earn a total of 146,977 from holding Ashtead Group PLC or generate 30.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.19% |
| Values | Daily Returns |
DXC Technology Co vs. Ashtead Group PLC
Performance |
| Timeline |
| DXC Technology |
| Ashtead Group PLC |
DXC Technology and Ashtead Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DXC Technology and Ashtead Group
The main advantage of trading using opposite DXC Technology and Ashtead Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DXC Technology position performs unexpectedly, Ashtead Group 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 Ashtead Group will offset losses from the drop in Ashtead Group's long position.| DXC Technology vs. Cornish Metals | DXC Technology vs. Gaztransport et Technigaz | DXC Technology vs. Fulcrum Metals PLC | DXC Technology vs. Gamma Communications PLC |
| Ashtead Group vs. Samsung Electronics Co | Ashtead Group vs. Samsung Electronics Co | Ashtead Group vs. Hyundai Motor | Ashtead Group 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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