Correlation Between Acco Brands and Healthcare Trust

Can any of the company-specific risk be diversified away by investing in both Acco Brands and Healthcare Trust 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 Acco Brands and Healthcare Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Acco Brands and Healthcare Trust, you can compare the effects of market volatilities on Acco Brands and Healthcare Trust 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 Acco Brands with a short position of Healthcare Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acco Brands and Healthcare Trust.

Diversification Opportunities for Acco Brands and Healthcare Trust

-0.37

Correlation Coefficient

Acco Brands  Healthcare Trust

Very good diversification

The 3 months correlation between Acco and Healthcare is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Acco Brands and Healthcare Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Healthcare Trust and Acco Brands 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 Acco Brands are associated (or correlated) with Healthcare Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Healthcare Trust has no effect on the direction of Acco Brands i.e., Acco Brands and Healthcare Trust go up and down completely randomly.

Pair Corralation between Acco Brands and Healthcare Trust

If you would invest (100.00) in Healthcare Trust on February 23, 2024 and sell it today you would earn a total of  100.00  from holding Healthcare Trust or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Acco Brands  vs.  Healthcare Trust

Acco Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Acco Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent 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.

Healthcare Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Healthcare Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Healthcare Trust is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Acco Brands and Healthcare Trust

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

The idea behind Acco Brands and Healthcare Trust 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.