Correlation Between HR Block and Accenture Plc
Can any of the company-specific risk be diversified away by investing in both HR Block 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 HR Block and Accenture Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HR Block and Accenture plc, you can compare the effects of market volatilities on HR Block 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 HR Block with a short position of Accenture Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of HR Block and Accenture Plc.
Diversification Opportunities for HR Block and Accenture Plc
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between HRB and Accenture is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding HR Block and Accenture plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Accenture plc and HR Block 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 HR Block 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 HR Block i.e., HR Block and Accenture Plc go up and down completely randomly.
Pair Corralation between HR Block and Accenture Plc
Considering the 90-day investment horizon HR Block is expected to generate 1.22 times more return on investment than Accenture Plc. However, HR Block is 1.22 times more volatile than Accenture plc. It trades about 0.07 of its potential returns per unit of risk. Accenture plc is currently generating about 0.02 per unit of risk. If you would invest 2,440 in HR Block on January 20, 2024 and sell it today you would earn a total of 2,244 from holding HR Block or generate 91.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HR Block vs. Accenture plc
Performance |
| Timeline |
| HR Block |
| Accenture plc |
HR Block and Accenture Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HR Block and Accenture Plc
The main advantage of trading using opposite HR Block and Accenture Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HR Block 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.The idea behind HR Block and Accenture plc 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.| Accenture Plc vs. Information Services Group | Accenture Plc vs. Home Bancorp | Accenture Plc vs. CRA International | Accenture Plc vs. Aquagold International |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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