Correlation Between Acco Brands and Western Asset

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

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

Diversification Opportunities for Acco Brands and Western Asset

0.08

Correlation Coefficient

Acco Brands  Western Asset

Significant diversification

The 3 months correlation between Acco and Western is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Acco Brands and Western Asset Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Investment and Acco Brands 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 Acco Brands are associated (or correlated) with Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Investment has no effect on the direction of Acco Brands i.e., Acco Brands and Western Asset go up and down completely randomly.

Pair Corralation between Acco Brands and Western Asset

Given the investment horizon of 90 days Acco Brands is expected to under-perform the Western Asset. In addition to that, Acco Brands is 3.45 times more volatile than Western Asset Investment. It trades about -0.29 of its total potential returns per unit of risk. Western Asset Investment is currently generating about -0.22 per unit of volatility. If you would invest  1,675  in Western Asset Investment on October 18, 2024 and sell it today you would lose (33.00) from holding Western Asset Investment or give up 1.97% of portfolio value over 90 days.

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

Acco Brands  vs.  Western Asset Investment

Acco Brands

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Acco Brands are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Acco Brands is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Western Asset Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Western Asset Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Western Asset is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Acco Brands and Western Asset

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

The idea behind Acco Brands and Western Asset Investment 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.