Correlation Between Acco Brands and INGEVITY

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

By analyzing existing cross correlation between Acco Brands and INGEVITY P 3875, you can compare the effects of market volatilities on Acco Brands and INGEVITY 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 INGEVITY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acco Brands and INGEVITY.

Diversification Opportunities for Acco Brands and INGEVITY

-0.19

Correlation Coefficient

Acco Brands  INGEVITY

Good diversification

The 3 months correlation between Acco and INGEVITY is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Acco Brands and INGEVITY P 3875 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INGEVITY P 3875 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 INGEVITY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INGEVITY P 3875 has no effect on the direction of Acco Brands i.e., Acco Brands and INGEVITY go up and down completely randomly.

Pair Corralation between Acco Brands and INGEVITY

Given the investment horizon of 90 days Acco Brands is expected to generate 2.18 times more return on investment than INGEVITY. However, Acco Brands is 2.18 times more volatile than INGEVITY P 3875. It trades about 0.11 of its potential returns per unit of risk. INGEVITY P 3875 is currently generating about -0.16 per unit of risk. If you would invest  475.00  in Acco Brands on September 25, 2024 and sell it today you would earn a total of  54.00  from holding Acco Brands or generate 11.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	92.86%
Values	Daily Returns

Acco Brands  vs.  INGEVITY P 3875

Acco Brands

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Acco Brands are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Acco Brands is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

INGEVITY P 3875

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INGEVITY P 3875 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for INGEVITY P 3875 investors.

Pair Trading with Acco Brands and INGEVITY

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

The idea behind Acco Brands and INGEVITY P 3875 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.