Correlation Between Acco Brands and Allient

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

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

Diversification Opportunities for Acco Brands and Allient

0.89

Correlation Coefficient

Acco Brands  Allient

Very poor diversification

The 3 months correlation between Acco and Allient is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Acco Brands and Allient in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allient 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 Allient. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allient has no effect on the direction of Acco Brands i.e., Acco Brands and Allient go up and down completely randomly.

Pair Corralation between Acco Brands and Allient

Given the investment horizon of 90 days Acco Brands is expected to generate 2.37 times less return on investment than Allient. But when comparing it to its historical volatility, Acco Brands is 1.13 times less risky than Allient. It trades about 0.07 of its potential returns per unit of risk. Allient is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  2,049  in Allient on September 18, 2024 and sell it today you would earn a total of  535.00  from holding Allient or generate 26.11% return on investment over 90 days.

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

Acco Brands  vs.  Allient

Acco Brands

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Acco Brands are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent fundamental indicators, Acco Brands may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Allient

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Allient are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Allient unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Acco Brands and Allient

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

The idea behind Acco Brands and Allient 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.