Correlation Between DXC Technology and Boeing

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

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

Diversification Opportunities for DXC Technology and Boeing

0.0

Correlation Coefficient

DXC Technology  Boeing

Pay attention - limited upside

The 3 months correlation between DXC and Boeing is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding DXC Technology and The Boeing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boeing 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 Boeing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boeing has no effect on the direction of DXC Technology i.e., DXC Technology and Boeing go up and down completely randomly.

Pair Corralation between DXC Technology and Boeing

Assuming the 90 days trading horizon DXC Technology is expected to under-perform the Boeing. But the stock apears to be less risky and, when comparing its historical volatility, DXC Technology is 1.74 times less risky than Boeing. The stock trades about -0.07 of its potential returns per unit of risk. The The Boeing is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  399,800  in The Boeing on October 5, 2024 and sell it today you would lose (46,000) from holding The Boeing or give up 11.51% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

DXC Technology  vs.  The Boeing

DXC Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DXC Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, DXC Technology is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Boeing

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Boeing are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, Boeing showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DXC Technology and Boeing

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

The idea behind DXC Technology and The Boeing 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.