Correlation Between DXC Technology and General Dynamics
Can any of the company-specific risk be diversified away by investing in both DXC Technology and General Dynamics 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 General Dynamics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DXC Technology and General Dynamics, you can compare the effects of market volatilities on DXC Technology and General Dynamics 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 General Dynamics. Check out your portfolio center. Please also check ongoing floating volatility patterns of DXC Technology and General Dynamics.
Diversification Opportunities for DXC Technology and General Dynamics
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between DXC and General is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding DXC Technology and General Dynamics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Dynamics 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 General Dynamics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Dynamics has no effect on the direction of DXC Technology i.e., DXC Technology and General Dynamics go up and down completely randomly.
Pair Corralation between DXC Technology and General Dynamics
Assuming the 90 days trading horizon DXC Technology is expected to under-perform the General Dynamics. In addition to that, DXC Technology is 1.19 times more volatile than General Dynamics. It trades about -0.07 of its total potential returns per unit of risk. General Dynamics is currently generating about 0.13 per unit of volatility. If you would invest 348,728 in General Dynamics on September 3, 2024 and sell it today you would earn a total of 227,772 from holding General Dynamics or generate 65.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
DXC Technology vs. General Dynamics
Performance |
| Timeline |
| DXC Technology |
| General Dynamics |
DXC Technology and General Dynamics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DXC Technology and General Dynamics
The main advantage of trading using opposite DXC Technology and General Dynamics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DXC Technology position performs unexpectedly, General Dynamics 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 General Dynamics will offset losses from the drop in General Dynamics' long position.| DXC Technology vs. Cognizant Technology Solutions | DXC Technology vs. The Select Sector | DXC Technology vs. Promotora y Operadora | DXC Technology vs. SPDR Series Trust |
| General Dynamics vs. Prudential Financial | General Dynamics vs. Grupo Sports World | General Dynamics vs. Verizon Communications | General Dynamics 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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