Correlation Between Apple and DXC Technology

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

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

Diversification Opportunities for Apple and DXC Technology

0.69

Correlation Coefficient

Apple  DXC Technology

Poor diversification

The 3 months correlation between Apple and DXC is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and DXC Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DXC Technology and Apple 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 Apple 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 Apple i.e., Apple and DXC Technology go up and down completely randomly.

Pair Corralation between Apple and DXC Technology

Assuming the 90 days trading horizon Apple Inc is expected to generate 0.56 times more return on investment than DXC Technology. However, Apple Inc is 1.77 times less risky than DXC Technology. It trades about 0.22 of its potential returns per unit of risk. DXC Technology Co is currently generating about 0.06 per unit of risk. If you would invest  19,459  in Apple Inc on September 17, 2024 and sell it today you would earn a total of  4,156  from holding Apple Inc or generate 21.36% return on investment over 90 days.

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

Apple Inc  vs.  DXC Technology Co

Apple Inc

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Apple exhibited solid returns over the last few months and may actually be approaching a breakup point.

DXC Technology

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in DXC Technology Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, DXC Technology may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Apple and DXC Technology

The main advantage of trading using opposite Apple and DXC Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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 Apple Inc and DXC Technology Co 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.