Correlation Between DXC Technology and DFS Furniture
Can any of the company-specific risk be diversified away by investing in both DXC Technology and DFS Furniture 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 DFS Furniture 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 DFS Furniture PLC, you can compare the effects of market volatilities on DXC Technology and DFS Furniture 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 DFS Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of DXC Technology and DFS Furniture.
Diversification Opportunities for DXC Technology and DFS Furniture
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between DXC and DFS is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding DXC Technology Co and DFS Furniture PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DFS Furniture 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 DFS Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DFS Furniture PLC has no effect on the direction of DXC Technology i.e., DXC Technology and DFS Furniture go up and down completely randomly.
Pair Corralation between DXC Technology and DFS Furniture
Assuming the 90 days trading horizon DXC Technology Co is expected to generate 1.25 times more return on investment than DFS Furniture. However, DXC Technology is 1.25 times more volatile than DFS Furniture PLC. It trades about 0.13 of its potential returns per unit of risk. DFS Furniture PLC is currently generating about 0.14 per unit of risk. If you would invest 1,991 in DXC Technology Co on September 19, 2024 and sell it today you would earn a total of 139.00 from holding DXC Technology Co or generate 6.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DXC Technology Co vs. DFS Furniture PLC
Performance |
| Timeline |
| DXC Technology |
| DFS Furniture PLC |
DXC Technology and DFS Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DXC Technology and DFS Furniture
The main advantage of trading using opposite DXC Technology and DFS Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DXC Technology position performs unexpectedly, DFS Furniture 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 DFS Furniture will offset losses from the drop in DFS Furniture's long position.| DXC Technology vs. Samsung Electronics Co | DXC Technology vs. Samsung Electronics Co | DXC Technology vs. Hyundai Motor | DXC Technology vs. Reliance Industries Ltd |
| DFS Furniture vs. Berkshire Hathaway | DFS Furniture vs. Hyundai Motor | DFS Furniture vs. Samsung Electronics Co | DFS Furniture 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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