Correlation Between Chevron Corp and DXC Technology
Can any of the company-specific risk be diversified away by investing in both Chevron Corp and DXC Technology 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 Chevron Corp and DXC Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chevron Corp and DXC Technology Co, you can compare the effects of market volatilities on Chevron Corp and DXC Technology 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 Chevron Corp with a short position of DXC Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chevron Corp and DXC Technology.
Diversification Opportunities for Chevron Corp and DXC Technology
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Chevron and DXC is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and DXC Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DXC Technology and Chevron Corp 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 Chevron Corp are associated (or correlated) with DXC Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DXC Technology has no effect on the direction of Chevron Corp i.e., Chevron Corp and DXC Technology go up and down completely randomly.
Pair Corralation between Chevron Corp and DXC Technology
Assuming the 90 days trading horizon Chevron Corp is expected to generate 1.61 times more return on investment than DXC Technology. However, Chevron Corp is 1.61 times more volatile than DXC Technology Co. It trades about 0.03 of its potential returns per unit of risk. DXC Technology Co is currently generating about -0.01 per unit of risk. If you would invest 14,342 in Chevron Corp on September 12, 2024 and sell it today you would earn a total of 1,284 from holding Chevron Corp or generate 8.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.02% |
| Values | Daily Returns |
Chevron Corp vs. DXC Technology Co
Performance |
| Timeline |
| Chevron Corp |
| DXC Technology |
Chevron Corp and DXC Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chevron Corp and DXC Technology
The main advantage of trading using opposite Chevron Corp and DXC Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chevron Corp position performs unexpectedly, DXC Technology 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 DXC Technology will offset losses from the drop in DXC Technology's long position.| Chevron Corp vs. DXC Technology Co | Chevron Corp vs. Ashtead Technology Holdings | Chevron Corp vs. Aeorema Communications Plc | Chevron Corp vs. Team Internet Group |
| DXC Technology vs. Hong Kong Land | DXC Technology vs. Neometals | DXC Technology vs. Coor Service Management | DXC Technology vs. Fidelity Sustainable USD |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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