Correlation Between DXC Technology and CVS Health
Can any of the company-specific risk be diversified away by investing in both DXC Technology and CVS Health 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 CVS Health 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 CVS Health, you can compare the effects of market volatilities on DXC Technology and CVS Health 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 CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of DXC Technology and CVS Health.
Diversification Opportunities for DXC Technology and CVS Health
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between DXC and CVS is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding DXC Technology Co and CVS Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Health 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 CVS Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVS Health has no effect on the direction of DXC Technology i.e., DXC Technology and CVS Health go up and down completely randomly.
Pair Corralation between DXC Technology and CVS Health
Assuming the 90 days trading horizon DXC Technology Co is expected to generate 1.29 times more return on investment than CVS Health. However, DXC Technology is 1.29 times more volatile than CVS Health. It trades about 0.0 of its potential returns per unit of risk. CVS Health is currently generating about 0.0 per unit of risk. If you would invest 2,428 in DXC Technology Co on September 4, 2024 and sell it today you would lose (278.00) from holding DXC Technology Co or give up 11.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DXC Technology Co vs. CVS Health
Performance |
| Timeline |
| DXC Technology |
| CVS Health |
DXC Technology and CVS Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DXC Technology and CVS Health
The main advantage of trading using opposite DXC Technology and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DXC Technology position performs unexpectedly, CVS Health 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 CVS Health will offset losses from the drop in CVS Health's long position.| DXC Technology vs. Apple Inc | DXC Technology vs. Apple Inc | DXC Technology vs. Apple Inc | DXC Technology vs. Apple Inc |
| CVS Health vs. TOTAL GABON | CVS Health vs. Walgreens Boots Alliance | CVS Health vs. Peak Resources Limited |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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