Correlation Between Check Point and DXC Technology
Can any of the company-specific risk be diversified away by investing in both Check Point and DXC Technology 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 Check Point and DXC Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Check Point Software and DXC Technology Co, you can compare the effects of market volatilities on Check Point and DXC Technology 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 Check Point with a short position of DXC Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Check Point and DXC Technology.
Diversification Opportunities for Check Point and DXC Technology
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Check and DXC is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and DXC Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DXC Technology and Check Point 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 Check Point Software are associated (or correlated) with DXC Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DXC Technology has no effect on the direction of Check Point i.e., Check Point and DXC Technology go up and down completely randomly.
Pair Corralation between Check Point and DXC Technology
Assuming the 90 days trading horizon Check Point Software is expected to under-perform the DXC Technology. In addition to that, Check Point is 1.06 times more volatile than DXC Technology Co. It trades about -0.13 of its total potential returns per unit of risk. DXC Technology Co is currently generating about 0.22 per unit of volatility. If you would invest 1,860 in DXC Technology Co on August 28, 2024 and sell it today you would earn a total of 273.00 from holding DXC Technology Co or generate 14.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Check Point Software vs. DXC Technology Co
Performance |
| Timeline |
| Check Point Software |
| DXC Technology |
Check Point and DXC Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Check Point and DXC Technology
The main advantage of trading using opposite Check Point and DXC Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Check Point position performs unexpectedly, DXC Technology 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 DXC Technology will offset losses from the drop in DXC Technology's long position.| Check Point vs. Apple Inc | Check Point vs. Apple Inc | Check Point vs. Apple Inc | Check Point vs. Microsoft |
| DXC Technology vs. Apple Inc | DXC Technology vs. Apple Inc | DXC Technology vs. Apple Inc | DXC Technology 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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