Correlation Between DXC Technology and Barclays PLC
Can any of the company-specific risk be diversified away by investing in both DXC Technology and Barclays PLC 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 Barclays PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DXC Technology and Barclays PLC, you can compare the effects of market volatilities on DXC Technology and Barclays PLC 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 Barclays PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of DXC Technology and Barclays PLC.
Diversification Opportunities for DXC Technology and Barclays PLC
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DXC and Barclays is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding DXC Technology and Barclays PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barclays PLC 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 are associated (or correlated) with Barclays PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barclays PLC has no effect on the direction of DXC Technology i.e., DXC Technology and Barclays PLC go up and down completely randomly.
Pair Corralation between DXC Technology and Barclays PLC
Assuming the 90 days trading horizon DXC Technology is expected to generate 2.15 times more return on investment than Barclays PLC. However, DXC Technology is 2.15 times more volatile than Barclays PLC. It trades about 0.17 of its potential returns per unit of risk. Barclays PLC is currently generating about 0.05 per unit of risk. If you would invest 10,679 in DXC Technology on October 11, 2024 and sell it today you would earn a total of 2,761 from holding DXC Technology or generate 25.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.37% |
| Values | Daily Returns |
DXC Technology vs. Barclays PLC
Performance |
| Timeline |
| DXC Technology |
| Barclays PLC |
DXC Technology and Barclays PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DXC Technology and Barclays PLC
The main advantage of trading using opposite DXC Technology and Barclays PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DXC Technology position performs unexpectedly, Barclays PLC 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 Barclays PLC will offset losses from the drop in Barclays PLC's long position.| DXC Technology vs. Vulcan Materials | DXC Technology vs. Liberty Broadband | DXC Technology vs. STMicroelectronics NV | DXC Technology vs. Live Nation Entertainment, |
| Barclays PLC vs. Seagate Technology Holdings | Barclays PLC vs. Spotify Technology SA | Barclays PLC vs. Unity Software | Barclays PLC vs. Paycom Software |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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