Correlation Between DXC Technology and Equinix

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

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

Diversification Opportunities for DXC Technology and Equinix

0.53

Correlation Coefficient

DXC Technology  Equinix

Very weak diversification

The 3 months correlation between DXC and Equinix is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding DXC Technology and Equinix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equinix 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 are associated (or correlated) with Equinix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equinix has no effect on the direction of DXC Technology i.e., DXC Technology and Equinix go up and down completely randomly.

Pair Corralation between DXC Technology and Equinix

If you would invest  7,203  in Equinix on October 11, 2024 and sell it today you would lose (4.00) from holding Equinix or give up 0.06% of portfolio value over 90 days.

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

DXC Technology  vs.  Equinix

DXC Technology

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DXC Technology are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, DXC Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Equinix

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Equinix are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Equinix sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DXC Technology and Equinix

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

The idea behind DXC Technology and Equinix 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.

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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.