Correlation Between DXC Technology and GlaxoSmithKline Plc
Can any of the company-specific risk be diversified away by investing in both DXC Technology and GlaxoSmithKline 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 GlaxoSmithKline 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 GlaxoSmithKline plc, you can compare the effects of market volatilities on DXC Technology and GlaxoSmithKline 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 GlaxoSmithKline Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of DXC Technology and GlaxoSmithKline Plc.
Diversification Opportunities for DXC Technology and GlaxoSmithKline Plc
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between DXC and GlaxoSmithKline is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding DXC Technology and GlaxoSmithKline plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GlaxoSmithKline 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 GlaxoSmithKline Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GlaxoSmithKline plc has no effect on the direction of DXC Technology i.e., DXC Technology and GlaxoSmithKline Plc go up and down completely randomly.
Pair Corralation between DXC Technology and GlaxoSmithKline Plc
Assuming the 90 days trading horizon DXC Technology is expected to under-perform the GlaxoSmithKline Plc. But the stock apears to be less risky and, when comparing its historical volatility, DXC Technology is 1.19 times less risky than GlaxoSmithKline Plc. The stock trades about -0.07 of its potential returns per unit of risk. The GlaxoSmithKline plc is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 61,044 in GlaxoSmithKline plc on September 5, 2024 and sell it today you would earn a total of 12,896 from holding GlaxoSmithKline plc or generate 21.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DXC Technology vs. GlaxoSmithKline plc
Performance |
| Timeline |
| DXC Technology |
| GlaxoSmithKline plc |
DXC Technology and GlaxoSmithKline Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DXC Technology and GlaxoSmithKline Plc
The main advantage of trading using opposite DXC Technology and GlaxoSmithKline Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DXC Technology position performs unexpectedly, GlaxoSmithKline 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 GlaxoSmithKline Plc will offset losses from the drop in GlaxoSmithKline Plc's long position.| DXC Technology vs. Verizon Communications | DXC Technology vs. Grupo Sports World | DXC Technology vs. Micron Technology | DXC Technology vs. McEwen Mining |
| GlaxoSmithKline Plc vs. FIBRA Storage | GlaxoSmithKline Plc vs. Martin Marietta Materials | GlaxoSmithKline Plc vs. New Oriental Education | GlaxoSmithKline Plc vs. Verizon Communications |
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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