Correlation Between EPAM Systems and Accenture Plc
Can any of the company-specific risk be diversified away by investing in both EPAM Systems and Accenture Plc 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 EPAM Systems and Accenture Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EPAM Systems and Accenture plc, you can compare the effects of market volatilities on EPAM Systems and Accenture Plc 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 EPAM Systems with a short position of Accenture Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of EPAM Systems and Accenture Plc.
Diversification Opportunities for EPAM Systems and Accenture Plc
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between EPAM and Accenture is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding EPAM Systems and Accenture plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Accenture plc and EPAM Systems 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 EPAM Systems are associated (or correlated) with Accenture Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Accenture plc has no effect on the direction of EPAM Systems i.e., EPAM Systems and Accenture Plc go up and down completely randomly.
Pair Corralation between EPAM Systems and Accenture Plc
Given the investment horizon of 90 days EPAM Systems is expected to generate 1.48 times more return on investment than Accenture Plc. However, EPAM Systems is 1.48 times more volatile than Accenture plc. It trades about 0.03 of its potential returns per unit of risk. Accenture plc is currently generating about 0.01 per unit of risk. If you would invest 22,685 in EPAM Systems on January 23, 2024 and sell it today you would earn a total of 2,010 from holding EPAM Systems or generate 8.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
EPAM Systems vs. Accenture plc
Performance |
| Timeline |
| EPAM Systems |
| Accenture plc |
EPAM Systems and Accenture Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EPAM Systems and Accenture Plc
The main advantage of trading using opposite EPAM Systems and Accenture Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EPAM Systems position performs unexpectedly, Accenture Plc 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 Accenture Plc will offset losses from the drop in Accenture Plc's long position.| EPAM Systems vs. FiscalNote Holdings | EPAM Systems vs. Innodata | EPAM Systems vs. Aurora Innovation | EPAM Systems vs. Conduent |
| Accenture Plc vs. FiscalNote Holdings | Accenture Plc vs. Innodata | Accenture Plc vs. Aurora Innovation | Accenture Plc vs. Conduent |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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