Correlation Between DexCom and DXC Technology
Can any of the company-specific risk be diversified away by investing in both DexCom 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 DexCom and DXC Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DexCom Inc and DXC Technology Co, you can compare the effects of market volatilities on DexCom 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 DexCom with a short position of DXC Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of DexCom and DXC Technology.
Diversification Opportunities for DexCom and DXC Technology
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DexCom and DXC is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding DexCom Inc and DXC Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DXC Technology and DexCom 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 DexCom Inc 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 DexCom i.e., DexCom and DXC Technology go up and down completely randomly.
Pair Corralation between DexCom and DXC Technology
Assuming the 90 days horizon DexCom Inc is expected to under-perform the DXC Technology. In addition to that, DexCom is 1.15 times more volatile than DXC Technology Co. It trades about -0.02 of its total potential returns per unit of risk. DXC Technology Co is currently generating about 0.0 per unit of volatility. If you would invest 2,428 in DXC Technology Co on September 2, 2024 and sell it today you would lose (342.00) from holding DXC Technology Co or give up 14.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DexCom Inc vs. DXC Technology Co
Performance |
| Timeline |
| DexCom Inc |
| DXC Technology |
DexCom and DXC Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DexCom and DXC Technology
The main advantage of trading using opposite DexCom and DXC Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DexCom 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.| DexCom vs. SK TELECOM TDADR | DexCom vs. Citic Telecom International | DexCom vs. Selective Insurance Group | DexCom vs. Universal Insurance Holdings |
| 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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