Correlation Between Apple and ACCO BRANDS

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

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

Diversification Opportunities for Apple and ACCO BRANDS

0.28

Correlation Coefficient

Apple  ACCO BRANDS

Modest diversification

The 3 months correlation between Apple and ACCO is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and ACCO BRANDS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACCO BRANDS and Apple 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 Apple Inc are associated (or correlated) with ACCO BRANDS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACCO BRANDS has no effect on the direction of Apple i.e., Apple and ACCO BRANDS go up and down completely randomly.

Pair Corralation between Apple and ACCO BRANDS

Assuming the 90 days trading horizon Apple Inc is not expected to generate positive returns. However, Apple Inc is 1.78 times less risky than ACCO BRANDS. It waists most of its returns potential to compensate for thr risk taken. ACCO BRANDS is generating about 0.11 per unit of risk. If you would invest  440.00  in ACCO BRANDS on October 25, 2024 and sell it today you would earn a total of  70.00  from holding ACCO BRANDS or generate 15.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Apple Inc  vs.  ACCO BRANDS

Apple Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apple Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Apple is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

ACCO BRANDS

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ACCO BRANDS are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental drivers, ACCO BRANDS exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apple and ACCO BRANDS

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

The idea behind Apple Inc and ACCO BRANDS 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..