Correlation Between DXC Technology and Raytheon Technologies
Can any of the company-specific risk be diversified away by investing in both DXC Technology and Raytheon Technologies 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 Raytheon Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DXC Technology and Raytheon Technologies, you can compare the effects of market volatilities on DXC Technology and Raytheon Technologies 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 Raytheon Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of DXC Technology and Raytheon Technologies.
Diversification Opportunities for DXC Technology and Raytheon Technologies
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between DXC and Raytheon is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding DXC Technology and Raytheon Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raytheon Technologies 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 Raytheon Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raytheon Technologies has no effect on the direction of DXC Technology i.e., DXC Technology and Raytheon Technologies go up and down completely randomly.
Pair Corralation between DXC Technology and Raytheon Technologies
Assuming the 90 days trading horizon DXC Technology is expected to under-perform the Raytheon Technologies. In addition to that, DXC Technology is 1.69 times more volatile than Raytheon Technologies. It trades about -0.23 of its total potential returns per unit of risk. Raytheon Technologies is currently generating about 0.15 per unit of volatility. If you would invest 12,055 in Raytheon Technologies on October 26, 2024 and sell it today you would earn a total of 392.00 from holding Raytheon Technologies or generate 3.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DXC Technology vs. Raytheon Technologies
Performance |
| Timeline |
| DXC Technology |
| Raytheon Technologies |
DXC Technology and Raytheon Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DXC Technology and Raytheon Technologies
The main advantage of trading using opposite DXC Technology and Raytheon Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DXC Technology position performs unexpectedly, Raytheon Technologies 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 Raytheon Technologies will offset losses from the drop in Raytheon Technologies' long position.| DXC Technology vs. Molson Coors Beverage | DXC Technology vs. Caesars Entertainment, | DXC Technology vs. Align Technology | DXC Technology vs. Fresenius Medical Care |
| Raytheon Technologies vs. Zoom Video Communications | Raytheon Technologies vs. Marfrig Global Foods | Raytheon Technologies vs. Caesars Entertainment, | Raytheon Technologies vs. DXC Technology |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |