Correlation Between DXC Technology and Martin Marietta
Can any of the company-specific risk be diversified away by investing in both DXC Technology and Martin Marietta 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 Martin Marietta into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DXC Technology and Martin Marietta Materials,, you can compare the effects of market volatilities on DXC Technology and Martin Marietta 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 Martin Marietta. Check out your portfolio center. Please also check ongoing floating volatility patterns of DXC Technology and Martin Marietta.
Diversification Opportunities for DXC Technology and Martin Marietta
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between DXC and Martin is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding DXC Technology and Martin Marietta Materials, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Martin Marietta Mate 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 Martin Marietta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Martin Marietta Mate has no effect on the direction of DXC Technology i.e., DXC Technology and Martin Marietta go up and down completely randomly.
Pair Corralation between DXC Technology and Martin Marietta
Assuming the 90 days trading horizon DXC Technology is expected to generate 228.17 times more return on investment than Martin Marietta. However, DXC Technology is 228.17 times more volatile than Martin Marietta Materials,. It trades about 0.13 of its potential returns per unit of risk. Martin Marietta Materials, is currently generating about 0.13 per unit of risk. If you would invest 10,679 in DXC Technology on October 7, 2024 and sell it today you would earn a total of 2,761 from holding DXC Technology or generate 25.85% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
DXC Technology vs. Martin Marietta Materials,
Performance |
Timeline |
DXC Technology |
Martin Marietta Mate |
DXC Technology and Martin Marietta Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with DXC Technology and Martin Marietta
The main advantage of trading using opposite DXC Technology and Martin Marietta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DXC Technology position performs unexpectedly, Martin Marietta 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 Martin Marietta will offset losses from the drop in Martin Marietta's long position.DXC Technology vs. CVS Health | DXC Technology vs. Teladoc Health | DXC Technology vs. Clover Health Investments, | DXC Technology vs. British American Tobacco |
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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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