Correlation Between Accord Financial and Power

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

By analyzing existing cross correlation between Accord Financial Corp and Power, you can compare the effects of market volatilities on Accord Financial and Power 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 Accord Financial with a short position of Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Accord Financial and Power.

Diversification Opportunities for Accord Financial and Power

-0.64

Correlation Coefficient

Accord Financial  Power

Excellent diversification

The 3 months correlation between Accord and Power is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Accord Financial Corp and Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power and Accord Financial 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 Accord Financial Corp are associated (or correlated) with Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power has no effect on the direction of Accord Financial i.e., Accord Financial and Power go up and down completely randomly.

Pair Corralation between Accord Financial and Power

Assuming the 90 days trading horizon Accord Financial Corp is expected to under-perform the Power. In addition to that, Accord Financial is 1.76 times more volatile than Power. It trades about -0.11 of its total potential returns per unit of risk. Power is currently generating about 0.18 per unit of volatility. If you would invest  4,195  in Power on September 18, 2024 and sell it today you would earn a total of  414.00  from holding Power or generate 9.87% return on investment over 90 days.

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

Accord Financial Corp  vs.  Power

Accord Financial Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Accord Financial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Power

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Power are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Power may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Accord Financial and Power

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

The idea behind Accord Financial Corp and Power 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.