Correlation Between Acco Brands and Steelcase

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

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

Diversification Opportunities for Acco Brands and Steelcase

0.33

Correlation Coefficient

Acco Brands  Steelcase

Weak diversification

The 3 months correlation between Acco and Steelcase is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Acco Brands and Steelcase in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steelcase 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 Steelcase. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steelcase has no effect on the direction of Acco Brands i.e., Acco Brands and Steelcase go up and down completely randomly.

Pair Corralation between Acco Brands and Steelcase

Given the investment horizon of 90 days Acco Brands is expected to under-perform the Steelcase. In addition to that, Acco Brands is 1.54 times more volatile than Steelcase. It trades about -0.06 of its total potential returns per unit of risk. Steelcase is currently generating about -0.04 per unit of volatility. If you would invest  1,170  in Steelcase on December 29, 2024 and sell it today you would lose (60.00) from holding Steelcase or give up 5.13% of portfolio value over 90 days.

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

Acco Brands  vs.  Steelcase

Acco Brands

Risk-Adjusted Performance

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 latest inconsistent performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Steelcase

Risk-Adjusted Performance

Very Weak

Over the last 90 days Steelcase has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Steelcase is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Acco Brands and Steelcase

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

The idea behind Acco Brands and Steelcase 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.