Correlation Between Accenture Plc and Xerox Corp

Can any of the company-specific risk be diversified away by investing in both Accenture Plc and Xerox Corp 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 Xerox Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Accenture plc and Xerox Corp, you can compare the effects of market volatilities on Accenture Plc and Xerox Corp 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 Xerox Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Accenture Plc and Xerox Corp.

Diversification Opportunities for Accenture Plc and Xerox Corp

0.61

Correlation Coefficient

Accenture Plc  Xerox Corp

Poor diversification

The 3 months correlation between Accenture and Xerox is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Accenture plc and Xerox Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xerox Corp 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 Xerox Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xerox Corp has no effect on the direction of Accenture Plc i.e., Accenture Plc and Xerox Corp go up and down completely randomly.

Pair Corralation between Accenture Plc and Xerox Corp

Considering the 90-day investment horizon Accenture plc is expected to under-perform the Xerox Corp. But the stock apears to be less risky and, when comparing its historical volatility, Accenture plc is 2.72 times less risky than Xerox Corp. The stock trades about -0.07 of its potential returns per unit of risk. The Xerox Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  918.00  in Xerox Corp on October 22, 2024 and sell it today you would earn a total of  16.00  from holding Xerox Corp or generate 1.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Accenture plc  vs.  Xerox Corp

Accenture plc

Risk-Adjusted Performance

0 of 100

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 current stock price disarray, may contribute to short-term losses for the investors.

Xerox Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xerox Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Xerox Corp is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Accenture Plc and Xerox Corp

The main advantage of trading using opposite Accenture Plc and Xerox Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Accenture Plc position performs unexpectedly, Xerox Corp 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 Xerox Corp will offset losses from the drop in Xerox Corp's long position.

The idea behind Accenture plc and Xerox Corp 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.

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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.