Correlation Between Air Products and DXC Technology
Can any of the company-specific risk be diversified away by investing in both Air Products 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 Air Products and DXC Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Products and and DXC Technology, you can compare the effects of market volatilities on Air Products 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 Air Products with a short position of DXC Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and DXC Technology.
Diversification Opportunities for Air Products and DXC Technology
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Air and DXC is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Air Products and and DXC Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DXC Technology and Air Products 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 Air Products and 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 Air Products i.e., Air Products and DXC Technology go up and down completely randomly.
Pair Corralation between Air Products and DXC Technology
Assuming the 90 days trading horizon Air Products and is expected to generate 0.67 times more return on investment than DXC Technology. However, Air Products and is 1.48 times less risky than DXC Technology. It trades about 0.13 of its potential returns per unit of risk. DXC Technology is currently generating about 0.08 per unit of risk. If you would invest 31,008 in Air Products and on October 9, 2024 and sell it today you would earn a total of 13,842 from holding Air Products and or generate 44.64% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Air Products and vs. DXC Technology
Performance |
Timeline |
Air Products |
DXC Technology |
Air Products and DXC Technology Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Air Products and DXC Technology
The main advantage of trading using opposite Air Products and DXC Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products 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.Air Products vs. Taiwan Semiconductor Manufacturing | Air Products vs. Apple Inc | Air Products vs. Alibaba Group Holding | Air Products vs. Banco Santander Chile |
DXC Technology vs. T Mobile | DXC Technology vs. Applied Materials, | DXC Technology vs. Mangels Industrial SA | DXC Technology vs. Martin Marietta Materials, |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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