Correlation Between Acme United and Timken
Can any of the company-specific risk be diversified away by investing in both Acme United and Timken 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 Acme United and Timken into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Acme United and Timken Company, you can compare the effects of market volatilities on Acme United and Timken 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 Acme United with a short position of Timken. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acme United and Timken.
Diversification Opportunities for Acme United and Timken
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Acme and Timken is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Acme United and Timken Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timken Company and Acme United 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 Acme United are associated (or correlated) with Timken. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timken Company has no effect on the direction of Acme United i.e., Acme United and Timken go up and down completely randomly.
Pair Corralation between Acme United and Timken
Considering the 90-day investment horizon Acme United is expected to generate 0.82 times more return on investment than Timken. However, Acme United is 1.21 times less risky than Timken. It trades about 0.04 of its potential returns per unit of risk. Timken Company is currently generating about -0.01 per unit of risk. If you would invest 4,255 in Acme United on September 13, 2024 and sell it today you would earn a total of 175.00 from holding Acme United or generate 4.11% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Acme United vs. Timken Company
Performance |
Timeline |
Acme United |
Timken Company |
Acme United and Timken Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Acme United and Timken
The main advantage of trading using opposite Acme United and Timken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acme United position performs unexpectedly, Timken 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 Timken will offset losses from the drop in Timken's long position.Acme United vs. Mannatech Incorporated | Acme United vs. European Wax Center | Acme United vs. Inter Parfums | Acme United vs. Spectrum Brands Holdings |
Check out your portfolio center.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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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