Correlation Between Xenia Hotels and DXC Technology
Can any of the company-specific risk be diversified away by investing in both Xenia Hotels 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 Xenia Hotels and DXC Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xenia Hotels Resorts and DXC Technology Co, you can compare the effects of market volatilities on Xenia Hotels 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 Xenia Hotels with a short position of DXC Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xenia Hotels and DXC Technology.
Diversification Opportunities for Xenia Hotels and DXC Technology
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Xenia and DXC is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Xenia Hotels Resorts and DXC Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DXC Technology and Xenia Hotels 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 Xenia Hotels Resorts 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 Xenia Hotels i.e., Xenia Hotels and DXC Technology go up and down completely randomly.
Pair Corralation between Xenia Hotels and DXC Technology
Assuming the 90 days trading horizon Xenia Hotels Resorts is expected to generate 0.95 times more return on investment than DXC Technology. However, Xenia Hotels Resorts is 1.05 times less risky than DXC Technology. It trades about 0.16 of its potential returns per unit of risk. DXC Technology Co is currently generating about 0.1 per unit of risk. If you would invest 1,209 in Xenia Hotels Resorts on August 28, 2024 and sell it today you would earn a total of 281.00 from holding Xenia Hotels Resorts or generate 23.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xenia Hotels Resorts vs. DXC Technology Co
Performance |
| Timeline |
| Xenia Hotels Resorts |
| DXC Technology |
Xenia Hotels and DXC Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xenia Hotels and DXC Technology
The main advantage of trading using opposite Xenia Hotels and DXC Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xenia Hotels 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.The idea behind Xenia Hotels Resorts and DXC Technology Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| DXC Technology vs. Apple Inc | DXC Technology vs. Apple Inc | DXC Technology vs. Apple Inc | DXC Technology vs. Apple Inc |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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