Correlation Between DXC Technology and International Consolidated

Can any of the company-specific risk be diversified away by investing in both DXC Technology and International Consolidated 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 International Consolidated into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DXC Technology Co and International Consolidated Airlines, you can compare the effects of market volatilities on DXC Technology and International Consolidated 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 International Consolidated. Check out your portfolio center. Please also check ongoing floating volatility patterns of DXC Technology and International Consolidated.

Diversification Opportunities for DXC Technology and International Consolidated

0.56

Correlation Coefficient

DXC Technology  International Consolidated

Very weak diversification

The 3 months correlation between DXC and International is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding DXC Technology Co and International Consolidated Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Consolidated 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 Co are associated (or correlated) with International Consolidated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Consolidated has no effect on the direction of DXC Technology i.e., DXC Technology and International Consolidated go up and down completely randomly.

Pair Corralation between DXC Technology and International Consolidated

Assuming the 90 days trading horizon DXC Technology Co is expected to under-perform the International Consolidated. But the stock apears to be less risky and, when comparing its historical volatility, DXC Technology Co is 1.09 times less risky than International Consolidated. The stock trades about -0.1 of its potential returns per unit of risk. The International Consolidated Airlines is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  30,210  in International Consolidated Airlines on December 25, 2024 and sell it today you would lose (1,410) from holding International Consolidated Airlines or give up 4.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.83%
Values	Daily Returns

DXC Technology Co  vs.  International Consolidated Air

DXC Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days DXC Technology Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

International Consolidated

Risk-Adjusted Performance

Very Weak

Over the last 90 days International Consolidated Airlines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, International Consolidated is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with DXC Technology and International Consolidated

The main advantage of trading using opposite DXC Technology and International Consolidated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DXC Technology position performs unexpectedly, International Consolidated 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 International Consolidated will offset losses from the drop in International Consolidated's long position.

The idea behind DXC Technology Co and International Consolidated Airlines pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.