Correlation Between Select Sector and Accenture Plc
Can any of the company-specific risk be diversified away by investing in both Select Sector 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 Select Sector and Accenture Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Select Sector and Accenture plc, you can compare the effects of market volatilities on Select Sector 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 Select Sector with a short position of Accenture Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Select Sector and Accenture Plc.
Diversification Opportunities for Select Sector and Accenture Plc
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Select and Accenture is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding The Select Sector and Accenture plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Accenture plc and Select Sector 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 The Select Sector 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 Select Sector i.e., Select Sector and Accenture Plc go up and down completely randomly.
Pair Corralation between Select Sector and Accenture Plc
Assuming the 90 days trading horizon Select Sector is expected to generate 1.01 times less return on investment than Accenture Plc. In addition to that, Select Sector is 1.13 times more volatile than Accenture plc. It trades about 0.07 of its total potential returns per unit of risk. Accenture plc is currently generating about 0.08 per unit of volatility. If you would invest 684,202 in Accenture plc on August 29, 2024 and sell it today you would earn a total of 29,416 from holding Accenture plc or generate 4.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 87.8% |
| Values | Daily Returns |
The Select Sector vs. Accenture plc
Performance |
| Timeline |
| Select Sector |
| Accenture plc |
Select Sector and Accenture Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Select Sector and Accenture Plc
The main advantage of trading using opposite Select Sector and Accenture Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Select Sector 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.| Select Sector vs. The Select Sector | Select Sector vs. The Select Sector | Select Sector vs. The Select Sector | Select Sector vs. The Select Sector |
| Accenture Plc vs. International Business Machines | Accenture Plc vs. DXC Technology | Accenture Plc vs. The Select Sector | Accenture Plc vs. SPDR Series Trust |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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