Correlation Between Acco Brands and Simon Property

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

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

Diversification Opportunities for Acco Brands and Simon Property

0.63

Correlation Coefficient

Acco Brands  Simon Property

Poor diversification

The 3 months correlation between Acco and Simon is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Acco Brands and Simon Property Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simon Property Group 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 Simon Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simon Property Group has no effect on the direction of Acco Brands i.e., Acco Brands and Simon Property go up and down completely randomly.

Pair Corralation between Acco Brands and Simon Property

Given the investment horizon of 90 days Acco Brands is expected to generate 1.21 times less return on investment than Simon Property. In addition to that, Acco Brands is 2.24 times more volatile than Simon Property Group. It trades about 0.08 of its total potential returns per unit of risk. Simon Property Group is currently generating about 0.21 per unit of volatility. If you would invest  16,188  in Simon Property Group on September 3, 2024 and sell it today you would earn a total of  2,172  from holding Simon Property Group or generate 13.42% 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.  Simon Property Group

Acco Brands

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Acco Brands are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Acco Brands may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Simon Property Group

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Simon Property Group are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Simon Property reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Acco Brands and Simon Property

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

The idea behind Acco Brands and Simon Property Group 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.

Check out your portfolio center.

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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.