Correlation Between United States and DXC Technology

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

By analyzing existing cross correlation between United States Steel and DXC Technology Co, you can compare the effects of market volatilities on United States 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 United States with a short position of DXC Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and DXC Technology.

Diversification Opportunities for United States and DXC Technology

0.33

Correlation Coefficient

United States  DXC Technology

Weak diversification

The 3 months correlation between United and DXC is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and DXC Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DXC Technology and United States 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 United States Steel 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 United States i.e., United States and DXC Technology go up and down completely randomly.

Pair Corralation between United States and DXC Technology

Assuming the 90 days trading horizon United States is expected to generate 2.59 times less return on investment than DXC Technology. In addition to that, United States is 1.11 times more volatile than DXC Technology Co. It trades about 0.04 of its total potential returns per unit of risk. DXC Technology Co is currently generating about 0.13 per unit of volatility. If you would invest  2,073  in DXC Technology Co on August 30, 2024 and sell it today you would earn a total of  181.00  from holding DXC Technology Co or generate 8.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

United States Steel  vs.  DXC Technology Co

United States Steel

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in United States Steel are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, United States unveiled solid returns over the last few months and may actually be approaching a breakup point.

DXC Technology

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in DXC Technology Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, DXC Technology may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with United States and DXC Technology

The main advantage of trading using opposite United States and DXC Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States 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.

The idea behind United States Steel and DXC Technology Co 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.