Correlation Between DXC Technology and T Mobile

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

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

Diversification Opportunities for DXC Technology and T Mobile

-0.7

Correlation Coefficient

DXC Technology  T Mobile

Excellent diversification

The 3 months correlation between DXC and T1MU34 is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding DXC Technology and T Mobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T Mobile 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 T Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T Mobile has no effect on the direction of DXC Technology i.e., DXC Technology and T Mobile go up and down completely randomly.

Pair Corralation between DXC Technology and T Mobile

Assuming the 90 days trading horizon DXC Technology is expected to under-perform the T Mobile. But the stock apears to be less risky and, when comparing its historical volatility, DXC Technology is 1.24 times less risky than T Mobile. The stock trades about -0.21 of its potential returns per unit of risk. The T Mobile is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  68,505  in T Mobile on December 22, 2024 and sell it today you would earn a total of  4,461  from holding T Mobile or generate 6.51% return on investment over 90 days.

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

DXC Technology  vs.  T Mobile

DXC Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days DXC Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

T Mobile

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in T Mobile are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak primary indicators, T Mobile may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with DXC Technology and T Mobile

The main advantage of trading using opposite DXC Technology and T Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DXC Technology position performs unexpectedly, T Mobile 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 T Mobile will offset losses from the drop in T Mobile's long position.

The idea behind DXC Technology and T Mobile 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.