Correlation Between Acco Brands and Publicis Groupe

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

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

Diversification Opportunities for Acco Brands and Publicis Groupe

0.17

Correlation Coefficient

Acco Brands  Publicis Groupe

Average diversification

The 3 months correlation between Acco and Publicis is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Acco Brands and Publicis Groupe SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Publicis Groupe SA 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 Publicis Groupe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Publicis Groupe SA has no effect on the direction of Acco Brands i.e., Acco Brands and Publicis Groupe go up and down completely randomly.

Pair Corralation between Acco Brands and Publicis Groupe

Given the investment horizon of 90 days Acco Brands is expected to under-perform the Publicis Groupe. In addition to that, Acco Brands is 1.23 times more volatile than Publicis Groupe SA. It trades about -0.62 of its total potential returns per unit of risk. Publicis Groupe SA is currently generating about -0.22 per unit of volatility. If you would invest  10,647  in Publicis Groupe SA on October 11, 2024 and sell it today you would lose (577.00) from holding Publicis Groupe SA or give up 5.42% 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.  Publicis Groupe SA

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.

Publicis Groupe SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Publicis Groupe SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Publicis Groupe is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Acco Brands and Publicis Groupe

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

The idea behind Acco Brands and Publicis Groupe SA 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.