Correlation Between Kimball Electronics and Acco Brands

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

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

Diversification Opportunities for Kimball Electronics and Acco Brands

0.84

Correlation Coefficient

Kimball Electronics  Acco Brands

Very poor diversification

The 3 months correlation between Kimball and Acco is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Kimball Electronics and Acco Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acco Brands and Kimball Electronics 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 Kimball Electronics are associated (or correlated) with Acco Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acco Brands has no effect on the direction of Kimball Electronics i.e., Kimball Electronics and Acco Brands go up and down completely randomly.

Pair Corralation between Kimball Electronics and Acco Brands

Allowing for the 90-day total investment horizon Kimball Electronics is expected to generate 1.31 times less return on investment than Acco Brands. In addition to that, Kimball Electronics is 1.01 times more volatile than Acco Brands. It trades about 0.05 of its total potential returns per unit of risk. Acco Brands is currently generating about 0.06 per unit of volatility. If you would invest  541.00  in Acco Brands on August 30, 2024 and sell it today you would earn a total of  40.00  from holding Acco Brands or generate 7.39% return on investment over 90 days.

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

Kimball Electronics  vs.  Acco Brands

Kimball Electronics

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kimball Electronics are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, Kimball Electronics may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Acco Brands

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Acco Brands are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent fundamental indicators, Acco Brands may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Kimball Electronics and Acco Brands

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

The idea behind Kimball Electronics and Acco Brands 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.