Correlation Between DXC Technology and GMO Internet
Can any of the company-specific risk be diversified away by investing in both DXC Technology and GMO Internet 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 GMO Internet 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 GMO Internet, you can compare the effects of market volatilities on DXC Technology and GMO Internet 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 GMO Internet. Check out your portfolio center. Please also check ongoing floating volatility patterns of DXC Technology and GMO Internet.
Diversification Opportunities for DXC Technology and GMO Internet
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between DXC and GMO is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding DXC Technology Co and GMO Internet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GMO Internet 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 GMO Internet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GMO Internet has no effect on the direction of DXC Technology i.e., DXC Technology and GMO Internet go up and down completely randomly.
Pair Corralation between DXC Technology and GMO Internet
Assuming the 90 days trading horizon DXC Technology Co is expected to generate 1.69 times more return on investment than GMO Internet. However, DXC Technology is 1.69 times more volatile than GMO Internet. It trades about -0.18 of its potential returns per unit of risk. GMO Internet is currently generating about -0.39 per unit of risk. If you would invest 2,043 in DXC Technology Co on October 16, 2024 and sell it today you would lose (116.00) from holding DXC Technology Co or give up 5.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.12% |
| Values | Daily Returns |
DXC Technology Co vs. GMO Internet
Performance |
| Timeline |
| DXC Technology |
| GMO Internet |
DXC Technology and GMO Internet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DXC Technology and GMO Internet
The main advantage of trading using opposite DXC Technology and GMO Internet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DXC Technology position performs unexpectedly, GMO Internet 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 GMO Internet will offset losses from the drop in GMO Internet's long position.| DXC Technology vs. OFFICE DEPOT | DXC Technology vs. CITY OFFICE REIT | DXC Technology vs. NEW MILLENNIUM IRON | DXC Technology vs. 24SEVENOFFICE GROUP AB |
| GMO Internet vs. SCOTT TECHNOLOGY | GMO Internet vs. DXC Technology Co | GMO Internet vs. Wayside Technology Group | GMO Internet vs. TITAN MACHINERY |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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