Correlation Between Acco Brands and Transurban

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

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

Diversification Opportunities for Acco Brands and Transurban

-0.46

Correlation Coefficient

Acco Brands  Transurban

Very good diversification

The 3 months correlation between Acco and Transurban is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Acco Brands and Transurban Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transurban 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 Transurban. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transurban Group has no effect on the direction of Acco Brands i.e., Acco Brands and Transurban go up and down completely randomly.

Pair Corralation between Acco Brands and Transurban

Given the investment horizon of 90 days Acco Brands is expected to under-perform the Transurban. But the stock apears to be less risky and, when comparing its historical volatility, Acco Brands is 2.14 times less risky than Transurban. The stock trades about -0.64 of its potential returns per unit of risk. The Transurban Group is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  793.00  in Transurban Group on October 10, 2024 and sell it today you would earn a total of  88.00  from holding Transurban Group or generate 11.1% return on investment over 90 days.

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

Acco Brands  vs.  Transurban Group

Acco Brands

Risk-Adjusted Performance

0 of 100

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.

Transurban Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Transurban Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Transurban 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 Transurban

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

The idea behind Acco Brands and Transurban 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.

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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 Anywhere module to track or share privately all of your investments from the convenience of any device.