Correlation Between Acco Brands and Global E

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

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

Diversification Opportunities for Acco Brands and Global E

0.67

Correlation Coefficient

Acco Brands  Global E

Poor diversification

The 3 months correlation between Acco and Global is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Acco Brands and Global E Online in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global E Online 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 Global E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global E Online has no effect on the direction of Acco Brands i.e., Acco Brands and Global E go up and down completely randomly.

Pair Corralation between Acco Brands and Global E

Given the investment horizon of 90 days Acco Brands is expected to generate 13.64 times less return on investment than Global E. But when comparing it to its historical volatility, Acco Brands is 1.01 times less risky than Global E. It trades about 0.02 of its potential returns per unit of risk. Global E Online is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  3,734  in Global E Online on September 25, 2024 and sell it today you would earn a total of  1,730  from holding Global E Online or generate 46.33% return on investment over 90 days.

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

Acco Brands  vs.  Global E Online

Acco Brands

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Acco Brands are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Acco Brands is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Global E Online

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global E Online are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental drivers, Global E exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Acco Brands and Global E

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

The idea behind Acco Brands and Global E Online 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.

Check out your portfolio center.

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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.