Correlation Between Acushnet Holdings and Escalade Incorporated

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

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

Diversification Opportunities for Acushnet Holdings and Escalade Incorporated

0.86

Correlation Coefficient

Acushnet Holdings  Escalade Incorporated

Very poor diversification

The 3 months correlation between Acushnet and Escalade is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Acushnet Holdings Corp and Escalade Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Escalade Incorporated and Acushnet Holdings 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 Acushnet Holdings Corp are associated (or correlated) with Escalade Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Escalade Incorporated has no effect on the direction of Acushnet Holdings i.e., Acushnet Holdings and Escalade Incorporated go up and down completely randomly.

Pair Corralation between Acushnet Holdings and Escalade Incorporated

Given the investment horizon of 90 days Acushnet Holdings Corp is expected to generate 0.71 times more return on investment than Escalade Incorporated. However, Acushnet Holdings Corp is 1.41 times less risky than Escalade Incorporated. It trades about 0.14 of its potential returns per unit of risk. Escalade Incorporated is currently generating about 0.09 per unit of risk. If you would invest  6,418  in Acushnet Holdings Corp on September 12, 2024 and sell it today you would earn a total of  1,222  from holding Acushnet Holdings Corp or generate 19.04% return on investment over 90 days.

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

Acushnet Holdings Corp  vs.  Escalade Incorporated

Acushnet Holdings Corp

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Acushnet Holdings Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak essential indicators, Acushnet Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Escalade Incorporated

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Escalade Incorporated are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental indicators, Escalade Incorporated sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Acushnet Holdings and Escalade Incorporated

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

The idea behind Acushnet Holdings Corp and Escalade Incorporated 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.