Correlation Between DXC Technology and SMA Solar
Can any of the company-specific risk be diversified away by investing in both DXC Technology and SMA Solar 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 SMA Solar 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 SMA Solar Technology, you can compare the effects of market volatilities on DXC Technology and SMA Solar 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 SMA Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of DXC Technology and SMA Solar.
Diversification Opportunities for DXC Technology and SMA Solar
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between DXC and SMA is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding DXC Technology Co and SMA Solar Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMA Solar Technology 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 SMA Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMA Solar Technology has no effect on the direction of DXC Technology i.e., DXC Technology and SMA Solar go up and down completely randomly.
Pair Corralation between DXC Technology and SMA Solar
Assuming the 90 days trading horizon DXC Technology Co is expected to generate 0.47 times more return on investment than SMA Solar. However, DXC Technology Co is 2.11 times less risky than SMA Solar. It trades about 0.25 of its potential returns per unit of risk. SMA Solar Technology is currently generating about -0.09 per unit of risk. If you would invest 1,919 in DXC Technology Co on November 2, 2024 and sell it today you would earn a total of 157.00 from holding DXC Technology Co or generate 8.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DXC Technology Co vs. SMA Solar Technology
Performance |
| Timeline |
| DXC Technology |
| SMA Solar Technology |
DXC Technology and SMA Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DXC Technology and SMA Solar
The main advantage of trading using opposite DXC Technology and SMA Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DXC Technology position performs unexpectedly, SMA Solar 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 SMA Solar will offset losses from the drop in SMA Solar's long position.| DXC Technology vs. SENECA FOODS A | DXC Technology vs. THAI BEVERAGE | DXC Technology vs. Austevoll Seafood ASA | DXC Technology vs. MTY Food Group |
| SMA Solar vs. CN DATANG C | SMA Solar vs. Cass Information Systems | SMA Solar vs. PRECISION DRILLING P | SMA Solar vs. Automatic Data Processing |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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