Correlation Between X FAB and Accenture Plc

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

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

Diversification Opportunities for X FAB and Accenture Plc

-0.28

Correlation Coefficient

X FAB  Accenture Plc

Very good diversification

The 3 months correlation between XFB and Accenture is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and Accenture plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Accenture plc and X FAB 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 X FAB Silicon Foundries 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 X FAB i.e., X FAB and Accenture Plc go up and down completely randomly.

Pair Corralation between X FAB and Accenture Plc

Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to under-perform the Accenture Plc. In addition to that, X FAB is 2.03 times more volatile than Accenture plc. It trades about -0.05 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  30,922  in Accenture plc on September 3, 2024 and sell it today you would earn a total of  3,563  from holding Accenture plc or generate 11.52% return on investment over 90 days.

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

X FAB Silicon Foundries  vs.  Accenture plc

X FAB Silicon

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days X FAB Silicon Foundries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's fundamental drivers remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Accenture plc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Accenture plc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Accenture Plc may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with X FAB and Accenture Plc

The main advantage of trading using opposite X FAB and Accenture Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X FAB 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 X FAB Silicon Foundries 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.