Correlation Between DXC Technology and MG Plc

Can any of the company-specific risk be diversified away by investing in both DXC Technology and MG 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 MG Plc 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 MG Plc, you can compare the effects of market volatilities on DXC Technology and MG 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 MG Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of DXC Technology and MG Plc.

Diversification Opportunities for DXC Technology and MG Plc

0.06

Correlation Coefficient

DXC Technology  MG Plc

Significant diversification

The 3 months correlation between DXC and MNG is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding DXC Technology Co and MG Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MG 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 Co are associated (or correlated) with MG Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MG Plc has no effect on the direction of DXC Technology i.e., DXC Technology and MG Plc go up and down completely randomly.

Pair Corralation between DXC Technology and MG Plc

Assuming the 90 days trading horizon DXC Technology Co is expected to under-perform the MG Plc. In addition to that, DXC Technology is 1.82 times more volatile than MG Plc. It trades about -0.01 of its total potential returns per unit of risk. MG Plc is currently generating about 0.03 per unit of volatility. If you would invest  16,631  in MG Plc on October 23, 2024 and sell it today you would earn a total of  3,699  from holding MG Plc or generate 22.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.4%
Values	Daily Returns

DXC Technology Co  vs.  MG Plc

DXC Technology

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in DXC Technology Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, DXC Technology is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

MG Plc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MG Plc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, MG Plc is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with DXC Technology and MG Plc

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

The idea behind DXC Technology Co and MG Plc 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.