Correlation Between DXC Technology and Starbucks
Can any of the company-specific risk be diversified away by investing in both DXC Technology and Starbucks 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 Starbucks 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 Starbucks, you can compare the effects of market volatilities on DXC Technology and Starbucks 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 Starbucks. Check out your portfolio center. Please also check ongoing floating volatility patterns of DXC Technology and Starbucks.
Diversification Opportunities for DXC Technology and Starbucks
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between DXC and Starbucks is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding DXC Technology Co and Starbucks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starbucks 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 Starbucks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Starbucks has no effect on the direction of DXC Technology i.e., DXC Technology and Starbucks go up and down completely randomly.
Pair Corralation between DXC Technology and Starbucks
Assuming the 90 days trading horizon DXC Technology Co is expected to under-perform the Starbucks. In addition to that, DXC Technology is 1.46 times more volatile than Starbucks. It trades about -0.01 of its total potential returns per unit of risk. Starbucks is currently generating about 0.02 per unit of volatility. If you would invest 9,531 in Starbucks on November 5, 2024 and sell it today you would earn a total of 933.00 from holding Starbucks or generate 9.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DXC Technology Co vs. Starbucks
Performance |
| Timeline |
| DXC Technology |
| Starbucks |
DXC Technology and Starbucks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DXC Technology and Starbucks
The main advantage of trading using opposite DXC Technology and Starbucks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DXC Technology position performs unexpectedly, Starbucks 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 Starbucks will offset losses from the drop in Starbucks' long position.| DXC Technology vs. Calibre Mining Corp | DXC Technology vs. DISTRICT METALS | DXC Technology vs. Arrow Electronics | DXC Technology vs. Ringmetall SE |
| Starbucks vs. SOUTHWEST AIRLINES | Starbucks vs. JAPAN AIRLINES | Starbucks vs. China Resources Beer | Starbucks vs. Gol Intelligent Airlines |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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