Correlation Between Microsoft and Accenture Plc
Can any of the company-specific risk be diversified away by investing in both Microsoft 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 Microsoft and Accenture Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Accenture plc, you can compare the effects of market volatilities on Microsoft 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 Microsoft with a short position of Accenture Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Accenture Plc.
Diversification Opportunities for Microsoft and Accenture Plc
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and Accenture is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Accenture plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Accenture plc and Microsoft 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 Microsoft 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 Microsoft i.e., Microsoft and Accenture Plc go up and down completely randomly.
Pair Corralation between Microsoft and Accenture Plc
Given the investment horizon of 90 days Microsoft is expected to generate 0.39 times more return on investment than Accenture Plc. However, Microsoft is 2.53 times less risky than Accenture Plc. It trades about -0.11 of its potential returns per unit of risk. Accenture plc is currently generating about -0.35 per unit of risk. If you would invest 42,141 in Microsoft on January 19, 2024 and sell it today you would lose (957.00) from holding Microsoft or give up 2.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Accenture plc
Performance |
| Timeline |
| Microsoft |
| Accenture plc |
Microsoft and Accenture Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Accenture Plc
The main advantage of trading using opposite Microsoft and Accenture Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft 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.| Microsoft vs. Palo Alto Networks | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings | Microsoft vs. Zscaler |
| Accenture Plc vs. International Business Machines | Accenture Plc vs. Aurora Innovation | Accenture Plc vs. ARB IOT Group | Accenture Plc vs. 9F Inc |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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