Correlation Between Infosys and Accenture Plc
Can any of the company-specific risk be diversified away by investing in both Infosys 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 Infosys and Accenture Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Infosys Ltd ADR and Accenture plc, you can compare the effects of market volatilities on Infosys 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 Infosys with a short position of Accenture Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Infosys and Accenture Plc.
Diversification Opportunities for Infosys and Accenture Plc
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Infosys and Accenture is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Infosys Ltd ADR and Accenture plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Accenture plc and Infosys 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 Infosys Ltd ADR 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 Infosys i.e., Infosys and Accenture Plc go up and down completely randomly.
Pair Corralation between Infosys and Accenture Plc
Given the investment horizon of 90 days Infosys is expected to generate 8.6 times less return on investment than Accenture Plc. But when comparing it to its historical volatility, Infosys Ltd ADR is 1.2 times less risky than Accenture Plc. It trades about 0.01 of its potential returns per unit of risk. Accenture plc is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 33,602 in Accenture plc on August 28, 2024 and sell it today you would earn a total of 2,527 from holding Accenture plc or generate 7.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Infosys Ltd ADR vs. Accenture plc
Performance |
| Timeline |
| Infosys Ltd ADR |
| Accenture plc |
Infosys and Accenture Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Infosys and Accenture Plc
The main advantage of trading using opposite Infosys and Accenture Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Infosys 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.| Infosys vs. Data Storage Corp | Infosys vs. Usio Inc | Infosys vs. ARB IOT Group | Infosys vs. FiscalNote Holdings |
| Accenture Plc vs. Globant SA | Accenture Plc vs. Concentrix | Accenture Plc vs. Cognizant Technology Solutions | Accenture Plc vs. CDW Corp |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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