Correlation Between Acacia Research and Ennis

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

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

Diversification Opportunities for Acacia Research and Ennis

0.16

Correlation Coefficient

Acacia Research  Ennis

Average diversification

The 3 months correlation between Acacia and Ennis is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Acacia Research and Ennis Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ennis Inc and Acacia Research 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 Acacia Research are associated (or correlated) with Ennis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ennis Inc has no effect on the direction of Acacia Research i.e., Acacia Research and Ennis go up and down completely randomly.

Pair Corralation between Acacia Research and Ennis

Given the investment horizon of 90 days Acacia Research is expected to under-perform the Ennis. In addition to that, Acacia Research is 1.83 times more volatile than Ennis Inc. It trades about -0.17 of its total potential returns per unit of risk. Ennis Inc is currently generating about -0.03 per unit of volatility. If you would invest  2,103  in Ennis Inc on December 28, 2024 and sell it today you would lose (60.00) from holding Ennis Inc or give up 2.85% of portfolio value over 90 days.

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

Acacia Research  vs.  Ennis Inc

Acacia Research

Risk-Adjusted Performance

Very Weak

Over the last 90 days Acacia Research has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Ennis Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ennis Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, Ennis is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Acacia Research and Ennis

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

The idea behind Acacia Research and Ennis 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.