Correlation Between Acco Brands and Acacia Research

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

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

Diversification Opportunities for Acco Brands and Acacia Research

-0.4

Correlation Coefficient

Acco Brands  Acacia Research

Very good diversification

The 3 months correlation between Acco and Acacia is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Acco Brands and Acacia Research in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acacia Research 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 Acacia Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acacia Research has no effect on the direction of Acco Brands i.e., Acco Brands and Acacia Research go up and down completely randomly.

Pair Corralation between Acco Brands and Acacia Research

Given the investment horizon of 90 days Acco Brands is expected to under-perform the Acacia Research. In addition to that, Acco Brands is 1.03 times more volatile than Acacia Research. It trades about -0.11 of its total potential returns per unit of risk. Acacia Research is currently generating about 0.04 per unit of volatility. If you would invest  505.00  in Acacia Research on March 19, 2024 and sell it today you would earn a total of  15.00  from holding Acacia Research or generate 2.97% 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.  Acacia Research

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 July 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Acacia Research

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Acacia Research are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Acacia Research is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Acco Brands and Acacia Research

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

The idea behind Acco Brands and Acacia Research 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.