Correlation Between Banxa Holdings and Accenture Plc

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

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

Diversification Opportunities for Banxa Holdings and Accenture Plc

0.82

Correlation Coefficient

Banxa Holdings  Accenture Plc

Very poor diversification

The 3 months correlation between Banxa and Accenture is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Banxa Holdings and Accenture plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Accenture plc and Banxa Holdings 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 Banxa Holdings 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 Banxa Holdings i.e., Banxa Holdings and Accenture Plc go up and down completely randomly.

Pair Corralation between Banxa Holdings and Accenture Plc

Assuming the 90 days horizon Banxa Holdings is expected to under-perform the Accenture Plc. In addition to that, Banxa Holdings is 4.92 times more volatile than Accenture plc. It trades about -0.06 of its total potential returns per unit of risk. Accenture plc is currently generating about -0.12 per unit of volatility. If you would invest  35,100  in Accenture plc on December 29, 2024 and sell it today you would lose (4,247) from holding Accenture plc or give up 12.1% of portfolio value over 90 days.

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

Banxa Holdings  vs.  Accenture plc

Banxa Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Banxa Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Accenture plc

Risk-Adjusted Performance

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 latest weak performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Banxa Holdings and Accenture Plc

The main advantage of trading using opposite Banxa Holdings and Accenture Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banxa Holdings 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.

The idea behind Banxa Holdings and Accenture plc 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.