Correlation Between COSTCO WHOLESALE and ACCO BRANDS

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

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

Diversification Opportunities for COSTCO WHOLESALE and ACCO BRANDS

0.14

Correlation Coefficient

COSTCO WHOLESALE  ACCO BRANDS

Average diversification

The 3 months correlation between COSTCO and ACCO is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding COSTCO WHOLESALE CDR and ACCO BRANDS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACCO BRANDS and COSTCO WHOLESALE 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 COSTCO WHOLESALE CDR 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 COSTCO WHOLESALE i.e., COSTCO WHOLESALE and ACCO BRANDS go up and down completely randomly.

Pair Corralation between COSTCO WHOLESALE and ACCO BRANDS

Assuming the 90 days trading horizon COSTCO WHOLESALE CDR is expected to generate 0.73 times more return on investment than ACCO BRANDS. However, COSTCO WHOLESALE CDR is 1.36 times less risky than ACCO BRANDS. It trades about -0.09 of its potential returns per unit of risk. ACCO BRANDS is currently generating about -0.11 per unit of risk. If you would invest  2,977  in COSTCO WHOLESALE CDR on December 19, 2024 and sell it today you would lose (337.00) from holding COSTCO WHOLESALE CDR or give up 11.32% of portfolio value over 90 days.

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

COSTCO WHOLESALE CDR  vs.  ACCO BRANDS

COSTCO WHOLESALE CDR

Risk-Adjusted Performance

Very Weak

Over the last 90 days COSTCO WHOLESALE CDR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

ACCO BRANDS

Risk-Adjusted Performance

Very Weak

Over the last 90 days ACCO BRANDS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental drivers remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with COSTCO WHOLESALE and ACCO BRANDS

The main advantage of trading using opposite COSTCO WHOLESALE and ACCO BRANDS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COSTCO WHOLESALE 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 COSTCO WHOLESALE CDR 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.