Correlation Between Accenture Plc and Ciena Corp
Can any of the company-specific risk be diversified away by investing in both Accenture Plc and Ciena Corp 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 Ciena Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Accenture plc and Ciena Corp, you can compare the effects of market volatilities on Accenture Plc and Ciena Corp 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 Ciena Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Accenture Plc and Ciena Corp.
Diversification Opportunities for Accenture Plc and Ciena Corp
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Accenture and Ciena is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Accenture plc and Ciena Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ciena Corp 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 Ciena Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ciena Corp has no effect on the direction of Accenture Plc i.e., Accenture Plc and Ciena Corp go up and down completely randomly.
Pair Corralation between Accenture Plc and Ciena Corp
Considering the 90-day investment horizon Accenture Plc is expected to generate 1.59 times less return on investment than Ciena Corp. But when comparing it to its historical volatility, Accenture plc is 1.63 times less risky than Ciena Corp. It trades about 0.16 of its potential returns per unit of risk. Ciena Corp is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 6,463 in Ciena Corp on August 31, 2024 and sell it today you would earn a total of 454.00 from holding Ciena Corp or generate 7.02% 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. Ciena Corp
Performance |
| Timeline |
| Accenture plc |
| Ciena Corp |
Accenture Plc and Ciena Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Accenture Plc and Ciena Corp
The main advantage of trading using opposite Accenture Plc and Ciena Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Accenture Plc position performs unexpectedly, Ciena Corp 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 Ciena Corp will offset losses from the drop in Ciena Corp's long position.| Accenture Plc vs. Globant SA | Accenture Plc vs. Concentrix | Accenture Plc vs. Cognizant Technology Solutions | Accenture Plc vs. CDW Corp |
| Ciena Corp vs. Extreme Networks | Ciena Corp vs. Hewlett Packard Enterprise | Ciena Corp vs. NETGEAR | Ciena Corp vs. Motorola Solutions |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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