Correlation Between Accenture Plc and Fidelity National

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

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

Diversification Opportunities for Accenture Plc and Fidelity National

0.63

Correlation Coefficient

Accenture Plc  Fidelity National

Poor diversification

The 3 months correlation between Accenture and Fidelity is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Accenture plc and Fidelity National Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity National 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 Fidelity National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity National has no effect on the direction of Accenture Plc i.e., Accenture Plc and Fidelity National go up and down completely randomly.

Pair Corralation between Accenture Plc and Fidelity National

Considering the 90-day investment horizon Accenture plc is expected to generate 1.49 times more return on investment than Fidelity National. However, Accenture Plc is 1.49 times more volatile than Fidelity National Information. It trades about 0.05 of its potential returns per unit of risk. Fidelity National Information is currently generating about 0.06 per unit of risk. If you would invest  33,955  in Accenture plc on September 5, 2024 and sell it today you would earn a total of  1,299  from holding Accenture plc or generate 3.83% return on investment over 90 days.

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

Accenture plc  vs.  Fidelity National Information

Accenture plc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Accenture plc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Accenture Plc is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Fidelity National

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity National Information are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward indicators, Fidelity National is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Accenture Plc and Fidelity National

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

The idea behind Accenture plc and Fidelity National Information 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.