Correlation Between DXC Technology and Caledonia Mining
Can any of the company-specific risk be diversified away by investing in both DXC Technology and Caledonia Mining 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 Caledonia Mining 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 Caledonia Mining, you can compare the effects of market volatilities on DXC Technology and Caledonia Mining 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 Caledonia Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of DXC Technology and Caledonia Mining.
Diversification Opportunities for DXC Technology and Caledonia Mining
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between DXC and Caledonia is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding DXC Technology Co and Caledonia Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caledonia Mining 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 Caledonia Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caledonia Mining has no effect on the direction of DXC Technology i.e., DXC Technology and Caledonia Mining go up and down completely randomly.
Pair Corralation between DXC Technology and Caledonia Mining
Assuming the 90 days trading horizon DXC Technology Co is expected to generate 1.23 times more return on investment than Caledonia Mining. However, DXC Technology is 1.23 times more volatile than Caledonia Mining. It trades about 0.0 of its potential returns per unit of risk. Caledonia Mining is currently generating about -0.01 per unit of risk. If you would invest 2,772 in DXC Technology Co on August 31, 2024 and sell it today you would lose (531.00) from holding DXC Technology Co or give up 19.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.96% |
| Values | Daily Returns |
DXC Technology Co vs. Caledonia Mining
Performance |
| Timeline |
| DXC Technology |
| Caledonia Mining |
DXC Technology and Caledonia Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DXC Technology and Caledonia Mining
The main advantage of trading using opposite DXC Technology and Caledonia Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DXC Technology position performs unexpectedly, Caledonia Mining 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 Caledonia Mining will offset losses from the drop in Caledonia Mining's long position.| DXC Technology vs. Gamma Communications PLC | DXC Technology vs. Charter Communications Cl | DXC Technology vs. HCA Healthcare | DXC Technology vs. Global Net Lease |
| Caledonia Mining vs. Hollywood Bowl Group | Caledonia Mining vs. XLMedia PLC | Caledonia Mining vs. Grand Vision Media | Caledonia Mining vs. Atresmedia |
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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