Correlation Between Fiserv and DXC Technology

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

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

Diversification Opportunities for Fiserv and DXC Technology

0.0

Correlation Coefficient

Fiserv  DXC Technology

Pay attention - limited upside

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

Pair Corralation between Fiserv and DXC Technology

Assuming the 90 days trading horizon Fiserv Inc is expected to generate 1.18 times more return on investment than DXC Technology. However, Fiserv is 1.18 times more volatile than DXC Technology. It trades about 0.12 of its potential returns per unit of risk. DXC Technology is currently generating about -0.07 per unit of risk. If you would invest  194,564  in Fiserv Inc on September 24, 2024 and sell it today you would earn a total of  214,936  from holding Fiserv Inc or generate 110.47% return on investment over 90 days.

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

Fiserv Inc  vs.  DXC Technology

Fiserv Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fiserv Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Fiserv showed solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Fiserv and DXC Technology

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

The idea behind Fiserv Inc and DXC Technology 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.