Correlation Between Insurance Australia and DXC Technology
Can any of the company-specific risk be diversified away by investing in both Insurance Australia 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 Insurance Australia and DXC Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Insurance Australia Group and DXC Technology Co, you can compare the effects of market volatilities on Insurance Australia 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 Insurance Australia with a short position of DXC Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insurance Australia and DXC Technology.
Diversification Opportunities for Insurance Australia and DXC Technology
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Insurance and DXC is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Insurance Australia Group and DXC Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DXC Technology and Insurance Australia 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 Insurance Australia Group 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 Insurance Australia i.e., Insurance Australia and DXC Technology go up and down completely randomly.
Pair Corralation between Insurance Australia and DXC Technology
Assuming the 90 days horizon Insurance Australia is expected to generate 1.46 times less return on investment than DXC Technology. But when comparing it to its historical volatility, Insurance Australia Group is 1.27 times less risky than DXC Technology. It trades about 0.06 of its potential returns per unit of risk. DXC Technology Co is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,973 in DXC Technology Co on September 16, 2024 and sell it today you would earn a total of 71.00 from holding DXC Technology Co or generate 3.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Insurance Australia Group vs. DXC Technology Co
Performance |
| Timeline |
| Insurance Australia |
| DXC Technology |
Insurance Australia and DXC Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insurance Australia and DXC Technology
The main advantage of trading using opposite Insurance Australia and DXC Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insurance Australia 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.| Insurance Australia vs. Superior Plus Corp | Insurance Australia vs. SIVERS SEMICONDUCTORS AB | Insurance Australia vs. CHINA HUARONG ENERHD 50 | Insurance Australia vs. NORDIC HALIBUT AS |
| 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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