Correlation Between CACI International and Accenture Plc

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

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

Diversification Opportunities for CACI International and Accenture Plc

-0.07

Correlation Coefficient

CACI International  Accenture Plc

Good diversification

The 3 months correlation between CACI and Accenture is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding CACI International and Accenture plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Accenture plc and CACI International 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 CACI International 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 CACI International i.e., CACI International and Accenture Plc go up and down completely randomly.

Pair Corralation between CACI International and Accenture Plc

Given the investment horizon of 90 days CACI International is expected to generate 1.69 times more return on investment than Accenture Plc. However, CACI International is 1.69 times more volatile than Accenture plc. It trades about -0.03 of its potential returns per unit of risk. Accenture plc is currently generating about -0.12 per unit of risk. If you would invest  40,223  in CACI International on December 29, 2024 and sell it today you would lose (2,624) from holding CACI International or give up 6.52% of portfolio value over 90 days.

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

CACI International  vs.  Accenture plc

CACI International

Risk-Adjusted Performance

Very Weak

Over the last 90 days CACI International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, CACI International is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

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 CACI International and Accenture Plc

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

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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.