Correlation Between Information Services and Accenture Plc

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

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

Diversification Opportunities for Information Services and Accenture Plc

0.09

Correlation Coefficient

Information Services  Accenture Plc

Significant diversification

The 3 months correlation between Information and Accenture is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Information Services Group and Accenture plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Accenture plc and Information Services 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 Information Services Group 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 Information Services i.e., Information Services and Accenture Plc go up and down completely randomly.

Pair Corralation between Information Services and Accenture Plc

Considering the 90-day investment horizon Information Services Group is expected to under-perform the Accenture Plc. But the stock apears to be less risky and, when comparing its historical volatility, Information Services Group is 1.12 times less risky than Accenture Plc. The stock trades about -0.13 of its potential returns per unit of risk. The Accenture plc is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  36,129  in Accenture plc on September 26, 2024 and sell it today you would lose (252.00) from holding Accenture plc or give up 0.7% of portfolio value over 90 days.

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

Information Services Group  vs.  Accenture plc

Information Services

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Information Services Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak forward indicators, Information Services may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Accenture plc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Accenture plc are ranked lower than 1 (%) 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.

Pair Trading with Information Services and Accenture Plc

The main advantage of trading using opposite Information Services and Accenture Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Information Services 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 Information Services Group 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.

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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.