Correlation Between DXC Technology and CACI International

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

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

Diversification Opportunities for DXC Technology and CACI International

0.36

Correlation Coefficient

DXC Technology  CACI International

Weak diversification

The 3 months correlation between DXC and CACI is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding DXC Technology Co and CACI International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CACI International 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 Co are associated (or correlated) with CACI International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CACI International has no effect on the direction of DXC Technology i.e., DXC Technology and CACI International go up and down completely randomly.

Pair Corralation between DXC Technology and CACI International

Considering the 90-day investment horizon DXC Technology Co is expected to under-perform the CACI International. But the stock apears to be less risky and, when comparing its historical volatility, DXC Technology Co is 1.21 times less risky than CACI International. The stock trades about -0.12 of its potential returns per unit of risk. The CACI International is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  40,803  in CACI International on December 26, 2024 and sell it today you would lose (3,506) from holding CACI International or give up 8.59% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

DXC Technology Co  vs.  CACI International

DXC Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days DXC Technology Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

CACI International

Risk-Adjusted Performance

Very Weak

Over the last 90 days CACI International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with DXC Technology and CACI International

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

The idea behind DXC Technology Co and CACI International 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.