Correlation Between CDW Corp and Accenture Plc

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

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

Diversification Opportunities for CDW Corp and Accenture Plc

-0.15

Correlation Coefficient

CDW Corp  Accenture Plc

Good diversification

The 3 months correlation between CDW and Accenture is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding CDW Corp and Accenture plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Accenture plc and CDW Corp 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 CDW Corp 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 CDW Corp i.e., CDW Corp and Accenture Plc go up and down completely randomly.

Pair Corralation between CDW Corp and Accenture Plc

Considering the 90-day investment horizon CDW Corp is expected to generate 0.81 times more return on investment than Accenture Plc. However, CDW Corp is 1.23 times less risky than Accenture Plc. It trades about 0.12 of its potential returns per unit of risk. Accenture plc is currently generating about 0.01 per unit of risk. If you would invest  19,990  in CDW Corp on January 30, 2024 and sell it today you would earn a total of  4,236  from holding CDW Corp or generate 21.19% return on investment over 90 days.

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

CDW Corp  vs.  Accenture plc

CDW Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CDW Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable fundamental indicators, CDW Corp is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

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. In spite of weak performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in May 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with CDW Corp and Accenture Plc

The main advantage of trading using opposite CDW Corp and Accenture Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDW Corp 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 CDW Corp 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.