Correlation Between Acco Brands and Intuitive Surgical

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

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

Diversification Opportunities for Acco Brands and Intuitive Surgical

0.62

Correlation Coefficient

Acco Brands  Intuitive Surgical

Poor diversification

The 3 months correlation between Acco and Intuitive is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Acco Brands and Intuitive Surgical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intuitive Surgical 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 Intuitive Surgical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intuitive Surgical has no effect on the direction of Acco Brands i.e., Acco Brands and Intuitive Surgical go up and down completely randomly.

Pair Corralation between Acco Brands and Intuitive Surgical

Given the investment horizon of 90 days Acco Brands is expected to under-perform the Intuitive Surgical. In addition to that, Acco Brands is 1.06 times more volatile than Intuitive Surgical. It trades about -0.62 of its total potential returns per unit of risk. Intuitive Surgical is currently generating about 0.04 per unit of volatility. If you would invest  53,809  in Intuitive Surgical on October 11, 2024 and sell it today you would earn a total of  593.00  from holding Intuitive Surgical or generate 1.1% return on investment over 90 days.

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

Acco Brands  vs.  Intuitive Surgical

Acco Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Acco Brands has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Intuitive Surgical

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Intuitive Surgical are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Intuitive Surgical reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Acco Brands and Intuitive Surgical

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

The idea behind Acco Brands and Intuitive Surgical 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.