Correlation Between Accord Financial and Clarke

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

By analyzing existing cross correlation between Accord Financial Corp and Clarke Inc, you can compare the effects of market volatilities on Accord Financial and Clarke 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 Accord Financial with a short position of Clarke. Check out your portfolio center. Please also check ongoing floating volatility patterns of Accord Financial and Clarke.

Diversification Opportunities for Accord Financial and Clarke

0.46

Correlation Coefficient

Accord Financial  Clarke

Very weak diversification

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

Pair Corralation between Accord Financial and Clarke

Assuming the 90 days trading horizon Accord Financial Corp is expected to generate 3.26 times more return on investment than Clarke. However, Accord Financial is 3.26 times more volatile than Clarke Inc. It trades about -0.04 of its potential returns per unit of risk. Clarke Inc is currently generating about -0.14 per unit of risk. If you would invest  385.00  in Accord Financial Corp on December 29, 2024 and sell it today you would lose (27.00) from holding Accord Financial Corp or give up 7.01% of portfolio value over 90 days.

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

Accord Financial Corp  vs.  Clarke Inc

Accord Financial Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Accord Financial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Accord Financial is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Clarke Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Clarke Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's forward indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Accord Financial and Clarke

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

The idea behind Accord Financial Corp and Clarke Inc 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.