Correlation Between DXC Technology and IMPERIAL TOBACCO
Can any of the company-specific risk be diversified away by investing in both DXC Technology and IMPERIAL TOBACCO 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 IMPERIAL TOBACCO 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 IMPERIAL TOBACCO , you can compare the effects of market volatilities on DXC Technology and IMPERIAL TOBACCO 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 IMPERIAL TOBACCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of DXC Technology and IMPERIAL TOBACCO.
Diversification Opportunities for DXC Technology and IMPERIAL TOBACCO
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DXC and IMPERIAL is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding DXC Technology Co and IMPERIAL TOBACCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IMPERIAL TOBACCO 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 IMPERIAL TOBACCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IMPERIAL TOBACCO has no effect on the direction of DXC Technology i.e., DXC Technology and IMPERIAL TOBACCO go up and down completely randomly.
Pair Corralation between DXC Technology and IMPERIAL TOBACCO
Assuming the 90 days trading horizon DXC Technology Co is expected to generate 2.51 times more return on investment than IMPERIAL TOBACCO. However, DXC Technology is 2.51 times more volatile than IMPERIAL TOBACCO . It trades about 0.2 of its potential returns per unit of risk. IMPERIAL TOBACCO is currently generating about 0.49 per unit of risk. If you would invest 1,839 in DXC Technology Co on September 1, 2024 and sell it today you would earn a total of 247.00 from holding DXC Technology Co or generate 13.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DXC Technology Co vs. IMPERIAL TOBACCO
Performance |
| Timeline |
| DXC Technology |
| IMPERIAL TOBACCO |
DXC Technology and IMPERIAL TOBACCO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DXC Technology and IMPERIAL TOBACCO
The main advantage of trading using opposite DXC Technology and IMPERIAL TOBACCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DXC Technology position performs unexpectedly, IMPERIAL TOBACCO 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 IMPERIAL TOBACCO will offset losses from the drop in IMPERIAL TOBACCO's long position.| DXC Technology vs. Apple Inc | DXC Technology vs. Apple Inc | DXC Technology vs. Apple Inc | DXC Technology vs. Apple Inc |
| IMPERIAL TOBACCO vs. INDOFOOD AGRI RES | IMPERIAL TOBACCO vs. AUSTEVOLL SEAFOOD | IMPERIAL TOBACCO vs. CAL MAINE FOODS | IMPERIAL TOBACCO vs. SALESFORCE INC CDR |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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