Correlation Between Accenture Plc and CGI

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Can any of the company-specific risk be diversified away by investing in both Accenture Plc and CGI 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 CGI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Accenture Plc and CGI Inc, you can compare the effects of market volatilities on Accenture Plc and CGI 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 CGI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Accenture Plc and CGI.

Diversification Opportunities for Accenture Plc and CGI

0.72
  Correlation Coefficient

Poor diversification

The 3 months correlation between Accenture and CGI is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Accenture Plc and CGI Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CGI Inc 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 CGI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CGI Inc has no effect on the direction of Accenture Plc i.e., Accenture Plc and CGI go up and down completely randomly.

Pair Corralation between Accenture Plc and CGI

Considering the 90-day investment horizon Accenture Plc is expected to under-perform the CGI. In addition to that, Accenture Plc is 1.82 times more volatile than CGI Inc. It trades about -0.19 of its total potential returns per unit of risk. CGI Inc is currently generating about -0.18 per unit of volatility. If you would invest  11,579  in CGI Inc on December 29, 2023 and sell it today you would lose (585.00) from holding CGI Inc or give up 5.05% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Accenture Plc  vs.  CGI Inc

 Performance 
       Timeline  
Accenture Plc 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Accenture Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Accenture Plc is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.
CGI Inc 

Risk-Adjusted Performance

2 of 100

 
Low
 
High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in CGI Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, CGI is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Accenture Plc and CGI Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Accenture Plc and CGI

The main advantage of trading using opposite Accenture Plc and CGI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Accenture Plc position performs unexpectedly, CGI 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 CGI will offset losses from the drop in CGI's long position.
The idea behind Accenture Plc and CGI Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.

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