Correlation Between DXC Technology and National Health
Can any of the company-specific risk be diversified away by investing in both DXC Technology and National 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 National 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 National Health Investors, you can compare the effects of market volatilities on DXC Technology and National 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 National Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of DXC Technology and National Health.
Diversification Opportunities for DXC Technology and National Health
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between DXC and National is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding DXC Technology Co and National Health Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Health Investors 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 National Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Health Investors has no effect on the direction of DXC Technology i.e., DXC Technology and National Health go up and down completely randomly.
Pair Corralation between DXC Technology and National Health
Assuming the 90 days trading horizon DXC Technology is expected to generate 11.65 times less return on investment than National Health. In addition to that, DXC Technology is 1.58 times more volatile than National Health Investors. It trades about 0.01 of its total potential returns per unit of risk. National Health Investors is currently generating about 0.11 per unit of volatility. If you would invest 4,800 in National Health Investors on September 4, 2024 and sell it today you would earn a total of 2,450 from holding National Health Investors or generate 51.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DXC Technology Co vs. National Health Investors
Performance |
| Timeline |
| DXC Technology |
| National Health Investors |
DXC Technology and National Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DXC Technology and National Health
The main advantage of trading using opposite DXC Technology and National Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DXC Technology position performs unexpectedly, National 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 National Health will offset losses from the drop in National Health's long position.| DXC Technology vs. Apple Inc | DXC Technology vs. Apple Inc | DXC Technology vs. Apple Inc | DXC Technology vs. Apple Inc |
| National Health vs. Apple Inc | National Health vs. Apple Inc | National Health vs. Apple Inc | National Health vs. Apple Inc |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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