Correlation Between Acco Brands and New Horizon

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

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

Diversification Opportunities for Acco Brands and New Horizon

0.38

Correlation Coefficient

Acco Brands  New Horizon

Weak diversification

The 3 months correlation between Acco and New is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Acco Brands and New Horizon Aircraft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Horizon Aircraft 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 New Horizon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Horizon Aircraft has no effect on the direction of Acco Brands i.e., Acco Brands and New Horizon go up and down completely randomly.

Pair Corralation between Acco Brands and New Horizon

Given the investment horizon of 90 days Acco Brands is expected to generate 0.2 times more return on investment than New Horizon. However, Acco Brands is 5.07 times less risky than New Horizon. It trades about 0.11 of its potential returns per unit of risk. New Horizon Aircraft is currently generating about 0.02 per unit of risk. If you would invest  516.00  in Acco Brands on September 12, 2024 and sell it today you would earn a total of  83.00  from holding Acco Brands or generate 16.09% return on investment over 90 days.

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

Acco Brands  vs.  New Horizon Aircraft

Acco Brands

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Acco Brands are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent fundamental indicators, Acco Brands displayed solid returns over the last few months and may actually be approaching a breakup point.

New Horizon Aircraft

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in New Horizon Aircraft are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, New Horizon reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Acco Brands and New Horizon

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

The idea behind Acco Brands and New Horizon Aircraft 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.