Correlation Between Accenture Plc and Costco Wholesale
Can any of the company-specific risk be diversified away by investing in both Accenture Plc and Costco Wholesale 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 Costco Wholesale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Accenture plc and Costco Wholesale, you can compare the effects of market volatilities on Accenture Plc and Costco Wholesale 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 Costco Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Accenture Plc and Costco Wholesale.
Diversification Opportunities for Accenture Plc and Costco Wholesale
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Accenture and Costco is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Accenture plc and Costco Wholesale in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Costco Wholesale 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 Costco Wholesale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Costco Wholesale has no effect on the direction of Accenture Plc i.e., Accenture Plc and Costco Wholesale go up and down completely randomly.
Pair Corralation between Accenture Plc and Costco Wholesale
Assuming the 90 days trading horizon Accenture plc is expected to under-perform the Costco Wholesale. But the stock apears to be less risky and, when comparing its historical volatility, Accenture plc is 1.64 times less risky than Costco Wholesale. The stock trades about -0.21 of its potential returns per unit of risk. The Costco Wholesale is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,920,017 in Costco Wholesale on September 14, 2024 and sell it today you would earn a total of 105,136 from holding Costco Wholesale or generate 5.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 76.19% |
| Values | Daily Returns |
Accenture plc vs. Costco Wholesale
Performance |
| Timeline |
| Accenture plc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
| Costco Wholesale |
Accenture Plc and Costco Wholesale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Accenture Plc and Costco Wholesale
The main advantage of trading using opposite Accenture Plc and Costco Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Accenture Plc position performs unexpectedly, Costco Wholesale 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 Costco Wholesale will offset losses from the drop in Costco Wholesale's long position.| Accenture Plc vs. Samsung Electronics Co | Accenture Plc vs. Delta Air Lines | Accenture Plc vs. Monster Beverage Corp | Accenture Plc vs. GMxico Transportes SAB |
| Costco Wholesale vs. DXC Technology | Costco Wholesale vs. GMxico Transportes SAB | Costco Wholesale vs. KB Home | Costco Wholesale vs. Applied Materials |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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