Correlation Between Accord Financial and Caldwell Partners

Can any of the company-specific risk be diversified away by investing in both Accord Financial and Caldwell Partners 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 Caldwell Partners 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 Caldwell Partners International, you can compare the effects of market volatilities on Accord Financial and Caldwell Partners 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 Caldwell Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Accord Financial and Caldwell Partners.

Diversification Opportunities for Accord Financial and Caldwell Partners

-0.11

Correlation Coefficient

Accord Financial  Caldwell Partners

Good diversification

The 3 months correlation between Accord and Caldwell is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Accord Financial Corp and Caldwell Partners Internationa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caldwell Partners 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 Caldwell Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caldwell Partners has no effect on the direction of Accord Financial i.e., Accord Financial and Caldwell Partners go up and down completely randomly.

Pair Corralation between Accord Financial and Caldwell Partners

Assuming the 90 days trading horizon Accord Financial Corp is expected to under-perform the Caldwell Partners. But the stock apears to be less risky and, when comparing its historical volatility, Accord Financial Corp is 2.29 times less risky than Caldwell Partners. The stock trades about -0.05 of its potential returns per unit of risk. The Caldwell Partners International is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  106.00  in Caldwell Partners International on October 10, 2024 and sell it today you would earn a total of  14.00  from holding Caldwell Partners International or generate 13.21% return on investment over 90 days.

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

Accord Financial Corp  vs.  Caldwell Partners Internationa

Accord Financial Corp

Risk-Adjusted Performance

0 of 100

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.

Caldwell Partners

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Caldwell Partners International are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating essential indicators, Caldwell Partners displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Accord Financial and Caldwell Partners

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

The idea behind Accord Financial Corp and Caldwell Partners International 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.