Correlation Between Acco Brands and Service Properties

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

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

Diversification Opportunities for Acco Brands and Service Properties

-0.19

Correlation Coefficient

Acco Brands  Service Properties

Good diversification

The 3 months correlation between Acco and Service is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Acco Brands and Service Properties Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Service Properties Trust 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 Service Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Service Properties Trust has no effect on the direction of Acco Brands i.e., Acco Brands and Service Properties go up and down completely randomly.

Pair Corralation between Acco Brands and Service Properties

Given the investment horizon of 90 days Acco Brands is expected to under-perform the Service Properties. In addition to that, Acco Brands is 1.45 times more volatile than Service Properties Trust. It trades about -0.13 of its total potential returns per unit of risk. Service Properties Trust is currently generating about 0.11 per unit of volatility. If you would invest  274.00  in Service Properties Trust on December 4, 2024 and sell it today you would earn a total of  18.00  from holding Service Properties Trust or generate 6.57% return on investment over 90 days.

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

Acco Brands  vs.  Service Properties Trust

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 inconsistent performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Service Properties Trust

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Service Properties Trust are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Service Properties may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Acco Brands and Service Properties

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

The idea behind Acco Brands and Service Properties Trust 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.