Correlation Between Accenture Plc and EPAM Systems
Can any of the company-specific risk be diversified away by investing in both Accenture Plc and EPAM Systems 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 EPAM Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Accenture plc and EPAM Systems, you can compare the effects of market volatilities on Accenture Plc and EPAM Systems 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 EPAM Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Accenture Plc and EPAM Systems.
Diversification Opportunities for Accenture Plc and EPAM Systems
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Accenture and EPAM is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Accenture plc and EPAM Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EPAM Systems 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 EPAM Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EPAM Systems has no effect on the direction of Accenture Plc i.e., Accenture Plc and EPAM Systems go up and down completely randomly.
Pair Corralation between Accenture Plc and EPAM Systems
Considering the 90-day investment horizon Accenture plc is expected to under-perform the EPAM Systems. In addition to that, Accenture Plc is 1.33 times more volatile than EPAM Systems. It trades about -0.34 of its total potential returns per unit of risk. EPAM Systems is currently generating about -0.37 per unit of volatility. If you would invest 29,270 in EPAM Systems on January 16, 2024 and sell it today you would lose (3,789) from holding EPAM Systems or give up 12.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Accenture plc vs. EPAM Systems
Performance |
| Timeline |
| Accenture plc |
| EPAM Systems |
Accenture Plc and EPAM Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Accenture Plc and EPAM Systems
The main advantage of trading using opposite Accenture Plc and EPAM Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Accenture Plc position performs unexpectedly, EPAM Systems 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 EPAM Systems will offset losses from the drop in EPAM Systems' long position.| Accenture Plc vs. Globant SA | Accenture Plc vs. Concentrix | Accenture Plc vs. CDW Corp | Accenture Plc vs. BigBearai Holdings |
| EPAM Systems vs. Globant SA | EPAM Systems vs. Concentrix | EPAM Systems vs. CDW Corp | EPAM Systems vs. BigBearai Holdings |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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