Correlation Between ALERION CLEANPOWER and ACCO Brands

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

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

Diversification Opportunities for ALERION CLEANPOWER and ACCO Brands

0.62

Correlation Coefficient

ALERION CLEANPOWER  ACCO Brands

Poor diversification

The 3 months correlation between ALERION and ACCO is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding ALERION CLEANPOWER and ACCO Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACCO Brands and ALERION CLEANPOWER 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 ALERION CLEANPOWER 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 ALERION CLEANPOWER i.e., ALERION CLEANPOWER and ACCO Brands go up and down completely randomly.

Pair Corralation between ALERION CLEANPOWER and ACCO Brands

Assuming the 90 days trading horizon ALERION CLEANPOWER is expected to under-perform the ACCO Brands. In addition to that, ALERION CLEANPOWER is 1.05 times more volatile than ACCO Brands. It trades about -0.01 of its total potential returns per unit of risk. ACCO Brands is currently generating about 0.1 per unit of volatility. If you would invest  438.00  in ACCO Brands on October 26, 2024 and sell it today you would earn a total of  60.00  from holding ACCO Brands or generate 13.7% return on investment over 90 days.

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

ALERION CLEANPOWER  vs.  ACCO Brands

ALERION CLEANPOWER

Risk-Adjusted Performance

0 of 100

Weak

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

ACCO Brands

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ACCO Brands are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ACCO Brands reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ALERION CLEANPOWER and ACCO Brands

The main advantage of trading using opposite ALERION CLEANPOWER and ACCO Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALERION CLEANPOWER 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' long position.

The idea behind ALERION CLEANPOWER 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.