Correlation Between Acco Brands and Aecom Technology

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

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

Diversification Opportunities for Acco Brands and Aecom Technology

-0.56

Correlation Coefficient

Acco Brands  Aecom Technology

Excellent diversification

The 3 months correlation between Acco and Aecom is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Acco Brands and Aecom Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aecom Technology 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 Aecom Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aecom Technology has no effect on the direction of Acco Brands i.e., Acco Brands and Aecom Technology go up and down completely randomly.

Pair Corralation between Acco Brands and Aecom Technology

Given the investment horizon of 90 days Acco Brands is expected to under-perform the Aecom Technology. In addition to that, Acco Brands is 1.65 times more volatile than Aecom Technology. It trades about -0.01 of its total potential returns per unit of risk. Aecom Technology is currently generating about 0.05 per unit of volatility. If you would invest  6,991  in Aecom Technology on January 26, 2024 and sell it today you would earn a total of  2,410  from holding Aecom Technology or generate 34.47% return on investment over 90 days.

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

Acco Brands  vs.  Aecom Technology

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 inconsistent 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.

Aecom Technology

Risk-Adjusted Performance

6 of 100

OK

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

Pair Trading with Acco Brands and Aecom Technology

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

The idea behind Acco Brands and Aecom Technology 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.