Correlation Between DXC Technology and BHP Group
Can any of the company-specific risk be diversified away by investing in both DXC Technology and BHP Group 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 BHP Group 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 BHP Group Limited, you can compare the effects of market volatilities on DXC Technology and BHP Group 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 BHP Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of DXC Technology and BHP Group.
Diversification Opportunities for DXC Technology and BHP Group
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between DXC and BHP is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding DXC Technology Co and BHP Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BHP Group Limited 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 BHP Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BHP Group Limited has no effect on the direction of DXC Technology i.e., DXC Technology and BHP Group go up and down completely randomly.
Pair Corralation between DXC Technology and BHP Group
Assuming the 90 days trading horizon DXC Technology Co is expected to generate 1.44 times more return on investment than BHP Group. However, DXC Technology is 1.44 times more volatile than BHP Group Limited. It trades about 0.27 of its potential returns per unit of risk. BHP Group Limited is currently generating about -0.07 per unit of risk. If you would invest 1,920 in DXC Technology Co on November 4, 2024 and sell it today you would earn a total of 171.00 from holding DXC Technology Co or generate 8.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
DXC Technology Co vs. BHP Group Limited
Performance |
| Timeline |
| DXC Technology |
| BHP Group Limited |
DXC Technology and BHP Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DXC Technology and BHP Group
The main advantage of trading using opposite DXC Technology and BHP Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DXC Technology position performs unexpectedly, BHP Group 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 BHP Group will offset losses from the drop in BHP Group's long position.| DXC Technology vs. ASURE SOFTWARE | DXC Technology vs. Easy Software AG | DXC Technology vs. MAGIC SOFTWARE ENTR | DXC Technology vs. Darden Restaurants |
| BHP Group vs. Fuji Media Holdings | BHP Group vs. Flutter Entertainment PLC | BHP Group vs. Hollywood Bowl Group | BHP Group vs. GigaMedia |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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