Correlation Between Accolade and National Research

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

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

Diversification Opportunities for Accolade and National Research

-0.31

Correlation Coefficient

Accolade  National Research

Very good diversification

The 3 months correlation between Accolade and National is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Accolade and National Research Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Research Corp and Accolade 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 Accolade are associated (or correlated) with National Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Research Corp has no effect on the direction of Accolade i.e., Accolade and National Research go up and down completely randomly.

Pair Corralation between Accolade and National Research

Given the investment horizon of 90 days Accolade is expected to generate 2.8 times more return on investment than National Research. However, Accolade is 2.8 times more volatile than National Research Corp. It trades about 0.01 of its potential returns per unit of risk. National Research Corp is currently generating about -0.07 per unit of risk. If you would invest  1,239  in Accolade on November 20, 2024 and sell it today you would lose (549.00) from holding Accolade or give up 44.31% of portfolio value over 90 days.

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

Accolade  vs.  National Research Corp

Accolade

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Accolade are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Accolade exhibited solid returns over the last few months and may actually be approaching a breakup point.

National Research Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days National Research Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, National Research is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Accolade and National Research

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

The idea behind Accolade and National Research Corp 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.