Correlation Between Accenture Plc and Bristol Myers
Can any of the company-specific risk be diversified away by investing in both Accenture Plc and Bristol Myers 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 Bristol Myers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Accenture plc and Bristol Myers Squibb, you can compare the effects of market volatilities on Accenture Plc and Bristol Myers 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 Bristol Myers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Accenture Plc and Bristol Myers.
Diversification Opportunities for Accenture Plc and Bristol Myers
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Accenture and Bristol is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Accenture plc and Bristol Myers Squibb in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bristol Myers Squibb 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 Bristol Myers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bristol Myers Squibb has no effect on the direction of Accenture Plc i.e., Accenture Plc and Bristol Myers go up and down completely randomly.
Pair Corralation between Accenture Plc and Bristol Myers
Assuming the 90 days trading horizon Accenture plc is expected to generate 0.73 times more return on investment than Bristol Myers. However, Accenture plc is 1.38 times less risky than Bristol Myers. It trades about 0.18 of its potential returns per unit of risk. Bristol Myers Squibb is currently generating about 0.09 per unit of risk. If you would invest 209,727 in Accenture plc on September 25, 2024 and sell it today you would earn a total of 12,901 from holding Accenture plc or generate 6.15% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 95.45% |
Values | Daily Returns |
Accenture plc vs. Bristol Myers Squibb
Performance |
Timeline |
Accenture plc |
Bristol Myers Squibb |
Accenture Plc and Bristol Myers Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Accenture Plc and Bristol Myers
The main advantage of trading using opposite Accenture Plc and Bristol Myers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Accenture Plc position performs unexpectedly, Bristol Myers 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 Bristol Myers will offset losses from the drop in Bristol Myers' long position.Accenture Plc vs. International Business Machines | Accenture Plc vs. Infosys Limited | Accenture Plc vs. Fiserv Inc | Accenture Plc vs. Fidelity National Information |
Bristol Myers vs. Waste Management | Bristol Myers vs. MAHLE Metal Leve | Bristol Myers vs. UnitedHealth Group Incorporated | Bristol Myers vs. Autohome |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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