Correlation Between Accenture Plc and Teradata Corp

Can any of the company-specific risk be diversified away by investing in both Accenture Plc and Teradata 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 Teradata 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 Teradata Corp, you can compare the effects of market volatilities on Accenture Plc and Teradata 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 Teradata Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Accenture Plc and Teradata Corp.

Diversification Opportunities for Accenture Plc and Teradata Corp

0.41

Correlation Coefficient

Accenture Plc  Teradata Corp

Very weak diversification

The 3 months correlation between Accenture and Teradata is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Accenture plc and Teradata Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teradata 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 Teradata Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teradata Corp has no effect on the direction of Accenture Plc i.e., Accenture Plc and Teradata Corp go up and down completely randomly.

Pair Corralation between Accenture Plc and Teradata Corp

Assuming the 90 days horizon Accenture Plc is expected to generate 2.28 times less return on investment than Teradata Corp. In addition to that, Accenture Plc is 1.42 times more volatile than Teradata Corp. It trades about 0.06 of its total potential returns per unit of risk. Teradata Corp is currently generating about 0.2 per unit of volatility. If you would invest  2,740  in Teradata Corp on October 20, 2024 and sell it today you would earn a total of  280.00  from holding Teradata Corp or generate 10.22% return on investment over 90 days.

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

Accenture plc  vs.  Teradata 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. Despite nearly stable basic indicators, Accenture Plc is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Teradata Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Teradata Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Teradata Corp is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Accenture Plc and Teradata Corp

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

The idea behind Accenture plc and Teradata 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.