Correlation Between DXC Technology and Diageo PLC
Can any of the company-specific risk be diversified away by investing in both DXC Technology and Diageo PLC 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 Diageo PLC 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 Diageo PLC, you can compare the effects of market volatilities on DXC Technology and Diageo PLC 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 Diageo PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of DXC Technology and Diageo PLC.
Diversification Opportunities for DXC Technology and Diageo PLC
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between DXC and Diageo is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding DXC Technology Co and Diageo PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diageo 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 Diageo PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diageo PLC has no effect on the direction of DXC Technology i.e., DXC Technology and Diageo PLC go up and down completely randomly.
Pair Corralation between DXC Technology and Diageo PLC
Assuming the 90 days trading horizon DXC Technology Co is expected to generate 2.15 times more return on investment than Diageo PLC. However, DXC Technology is 2.15 times more volatile than Diageo PLC. It trades about 0.0 of its potential returns per unit of risk. Diageo PLC is currently generating about -0.05 per unit of risk. If you would invest 2,663 in DXC Technology Co on September 14, 2024 and sell it today you would lose (509.00) from holding DXC Technology Co or give up 19.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.39% |
| Values | Daily Returns |
DXC Technology Co vs. Diageo PLC
Performance |
| Timeline |
| DXC Technology |
| Diageo PLC |
DXC Technology and Diageo PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DXC Technology and Diageo PLC
The main advantage of trading using opposite DXC Technology and Diageo PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DXC Technology position performs unexpectedly, Diageo PLC 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 Diageo PLC will offset losses from the drop in Diageo PLC's long position.| DXC Technology vs. Batm Advanced Communications | DXC Technology vs. Aeorema Communications Plc | DXC Technology vs. Tata Steel Limited | DXC Technology vs. Blackstone Loan Financing |
| Diageo PLC vs. Sunny Optical Technology | Diageo PLC vs. SMA Solar Technology | Diageo PLC vs. DXC Technology Co | Diageo PLC vs. Bytes Technology |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
Other Complementary Tools
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |