Correlation Between Acacia Research and Equifax

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

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

Diversification Opportunities for Acacia Research and Equifax

0.51

Correlation Coefficient

Acacia Research  Equifax

Very weak diversification

The 3 months correlation between Acacia and Equifax is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Acacia Research and Equifax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equifax 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 Equifax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equifax has no effect on the direction of Acacia Research i.e., Acacia Research and Equifax go up and down completely randomly.

Pair Corralation between Acacia Research and Equifax

Given the investment horizon of 90 days Acacia Research is expected to generate 1.44 times more return on investment than Equifax. However, Acacia Research is 1.44 times more volatile than Equifax. It trades about 0.04 of its potential returns per unit of risk. Equifax is currently generating about -0.02 per unit of risk. If you would invest  436.00  in Acacia Research on September 5, 2024 and sell it today you would earn a total of  6.00  from holding Acacia Research or generate 1.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Acacia Research  vs.  Equifax

Acacia Research

Risk-Adjusted Performance

0 of 100

Very Weak

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

Equifax

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Equifax has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Acacia Research and Equifax

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

The idea behind Acacia Research and Equifax 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.