Correlation Between AAON and Acco Brands

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

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

Diversification Opportunities for AAON and Acco Brands

-0.57

Correlation Coefficient

AAON  Acco Brands

Excellent diversification

The 3 months correlation between AAON and Acco is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding AAON Inc and Acco Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acco Brands and AAON 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 AAON Inc are associated (or correlated) with Acco Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acco Brands has no effect on the direction of AAON i.e., AAON and Acco Brands go up and down completely randomly.

Pair Corralation between AAON and Acco Brands

Given the investment horizon of 90 days AAON Inc is expected to generate 1.29 times more return on investment than Acco Brands. However, AAON is 1.29 times more volatile than Acco Brands. It trades about 0.04 of its potential returns per unit of risk. Acco Brands is currently generating about -0.34 per unit of risk. If you would invest  8,551  in AAON Inc on January 24, 2024 and sell it today you would earn a total of  122.00  from holding AAON Inc or generate 1.43% return on investment over 90 days.

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

AAON Inc  vs.  Acco Brands

AAON Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AAON Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, AAON displayed solid returns over the last few months and may actually be approaching a breakup point.

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 unsteady 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 AAON and Acco Brands

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

The idea behind AAON Inc and Acco Brands 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.