Correlation Between Acme United and Edgewell Personal
Can any of the company-specific risk be diversified away by investing in both Acme United and Edgewell Personal 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 Acme United and Edgewell Personal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Acme United and Edgewell Personal Care, you can compare the effects of market volatilities on Acme United and Edgewell Personal 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 Acme United with a short position of Edgewell Personal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acme United and Edgewell Personal.
Diversification Opportunities for Acme United and Edgewell Personal
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Acme and Edgewell is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Acme United and Edgewell Personal Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edgewell Personal Care and Acme United 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 Acme United are associated (or correlated) with Edgewell Personal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edgewell Personal Care has no effect on the direction of Acme United i.e., Acme United and Edgewell Personal go up and down completely randomly.
Pair Corralation between Acme United and Edgewell Personal
Considering the 90-day investment horizon Acme United is expected to generate 1.42 times more return on investment than Edgewell Personal. However, Acme United is 1.42 times more volatile than Edgewell Personal Care. It trades about 0.01 of its potential returns per unit of risk. Edgewell Personal Care is currently generating about -0.03 per unit of risk. If you would invest 4,354 in Acme United on September 16, 2024 and sell it today you would lose (25.00) from holding Acme United or give up 0.57% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Acme United vs. Edgewell Personal Care
Performance |
Timeline |
Acme United |
Edgewell Personal Care |
Acme United and Edgewell Personal Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Acme United and Edgewell Personal
The main advantage of trading using opposite Acme United and Edgewell Personal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acme United position performs unexpectedly, Edgewell Personal 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 Edgewell Personal will offset losses from the drop in Edgewell Personal's long position.Acme United vs. Mannatech Incorporated | ||
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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