Correlation Between CGI and Accenture Plc

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Can any of the company-specific risk be diversified away by investing in both CGI 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 CGI and Accenture Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CGI Inc and Accenture Plc, you can compare the effects of market volatilities on CGI 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 CGI with a short position of Accenture Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of CGI and Accenture Plc.

Diversification Opportunities for CGI and Accenture Plc

0.72
  Correlation Coefficient

Poor diversification

The 3 months correlation between CGI and Accenture is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding CGI Inc and Accenture Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Accenture Plc and CGI 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 CGI Inc 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 CGI i.e., CGI and Accenture Plc go up and down completely randomly.

Pair Corralation between CGI and Accenture Plc

Considering the 90-day investment horizon CGI Inc is expected to generate 0.55 times more return on investment than Accenture Plc. However, CGI Inc is 1.82 times less risky than Accenture Plc. It trades about -0.18 of its potential returns per unit of risk. Accenture Plc is currently generating about -0.19 per unit of risk. If you would invest  11,579  in CGI Inc on December 29, 2023 and sell it today you would lose (585.00) from holding CGI Inc or give up 5.05% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

CGI Inc  vs.  Accenture Plc

 Performance 
       Timeline  
CGI Inc 

Risk-Adjusted Performance

2 of 100

 
Low
 
High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in CGI Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, CGI is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.
Accenture Plc 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
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 very healthy fundamental indicators, Accenture Plc is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

CGI and Accenture Plc Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with CGI and Accenture Plc

The main advantage of trading using opposite CGI and Accenture Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CGI 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 CGI Inc 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.

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