Correlation Between United States and Accenture Plc

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Can any of the company-specific risk be diversified away by investing in both United States 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 United States and Accenture Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United States Steel and Accenture Plc, you can compare the effects of market volatilities on United States 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 United States with a short position of Accenture Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and Accenture Plc.

Diversification Opportunities for United States and Accenture Plc

-0.01
  Correlation Coefficient

Good diversification

The 3 months correlation between United and Accenture is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and Accenture Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Accenture Plc and United States 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 United States Steel 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 United States i.e., United States and Accenture Plc go up and down completely randomly.

Pair Corralation between United States and Accenture Plc

Taking into account the 90-day investment horizon United States Steel is expected to under-perform the Accenture Plc. In addition to that, United States is 1.33 times more volatile than Accenture Plc. It trades about -0.19 of its total potential returns per unit of risk. Accenture Plc is currently generating about -0.15 per unit of volatility. If you would invest  37,791  in Accenture Plc on December 29, 2023 and sell it today you would lose (3,130) from holding Accenture Plc or give up 8.28% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

United States Steel  vs.  Accenture Plc

 Performance 
       Timeline  
United States Steel 

Risk-Adjusted Performance

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Over the last 90 days United States Steel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2024. The current disturbance may also be a sign of long term up-swing for the company investors.
Accenture Plc 

Risk-Adjusted Performance

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Low
 
High
Very Weak
Over the last 90 days Accenture Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Accenture Plc is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

United States and Accenture Plc Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with United States and Accenture Plc

The main advantage of trading using opposite United States and Accenture Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States 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 United States Steel 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.
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.

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