Correlation Between Accenture Plc and Information Services

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

By analyzing existing cross correlation between Accenture plc and Information Services Group, you can compare the effects of market volatilities on Accenture Plc and Information Services 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 Accenture Plc with a short position of Information Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of Accenture Plc and Information Services.

Diversification Opportunities for Accenture Plc and Information Services

0.77

Correlation Coefficient

Accenture Plc  Information Services

Poor diversification

The 3 months correlation between Accenture and Information is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Accenture plc and Information Services Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Information Services and Accenture Plc 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 Accenture plc are associated (or correlated) with Information Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Information Services has no effect on the direction of Accenture Plc i.e., Accenture Plc and Information Services go up and down completely randomly.

Pair Corralation between Accenture Plc and Information Services

Considering the 90-day investment horizon Accenture plc is expected to generate 0.65 times more return on investment than Information Services. However, Accenture plc is 1.54 times less risky than Information Services. It trades about -0.52 of its potential returns per unit of risk. Information Services Group is currently generating about -0.49 per unit of risk. If you would invest  33,786  in Accenture plc on February 1, 2024 and sell it today you would lose (3,695) from holding Accenture plc or give up 10.94% of portfolio value over 90 days.

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

Accenture plc  vs.  Information Services Group

Accenture plc

Risk-Adjusted Performance

0 of 100

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 unsteady performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in June 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Information Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Information Services Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in June 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Accenture Plc and Information Services

The main advantage of trading using opposite Accenture Plc and Information Services positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Accenture Plc position performs unexpectedly, Information Services 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 Information Services will offset losses from the drop in Information Services' long position.

The idea behind Accenture plc and Information Services Group 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.