Correlation Between DXC Technology and United Airlines
Can any of the company-specific risk be diversified away by investing in both DXC Technology and United Airlines 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 United Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DXC Technology and United Airlines Holdings, you can compare the effects of market volatilities on DXC Technology and United Airlines 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 United Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of DXC Technology and United Airlines.
Diversification Opportunities for DXC Technology and United Airlines
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between DXC and United is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding DXC Technology and United Airlines Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Airlines Holdings 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 United Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Airlines Holdings has no effect on the direction of DXC Technology i.e., DXC Technology and United Airlines go up and down completely randomly.
Pair Corralation between DXC Technology and United Airlines
Assuming the 90 days trading horizon DXC Technology is expected to generate 461.6 times less return on investment than United Airlines. But when comparing it to its historical volatility, DXC Technology is 168.09 times less risky than United Airlines. It trades about 0.06 of its potential returns per unit of risk. United Airlines Holdings is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 62,300 in United Airlines Holdings on August 25, 2024 and sell it today you would earn a total of 129,899 from holding United Airlines Holdings or generate 208.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.63% |
| Values | Daily Returns |
DXC Technology vs. United Airlines Holdings
Performance |
| Timeline |
| DXC Technology |
| United Airlines Holdings |
DXC Technology and United Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DXC Technology and United Airlines
The main advantage of trading using opposite DXC Technology and United Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DXC Technology position performs unexpectedly, United Airlines 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 United Airlines will offset losses from the drop in United Airlines' long position.| DXC Technology vs. International Business Machines | DXC Technology vs. Fiserv Inc | DXC Technology vs. Cognizant Technology Solutions |
| United Airlines vs. Delta Air Lines | United Airlines vs. Southwest Airlines | United Airlines vs. JetBlue Airways | United Airlines vs. Controladora Vuela Compaa |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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