Correlation Between Kodiak Gas and Acco Brands

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

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

Diversification Opportunities for Kodiak Gas and Acco Brands

0.63

Correlation Coefficient

Kodiak Gas  Acco Brands

Poor diversification

The 3 months correlation between Kodiak and Acco is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Kodiak Gas Services, and Acco Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acco Brands and Kodiak Gas 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 Kodiak Gas Services, 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 Kodiak Gas i.e., Kodiak Gas and Acco Brands go up and down completely randomly.

Pair Corralation between Kodiak Gas and Acco Brands

Considering the 90-day investment horizon Kodiak Gas Services, is expected to generate 1.05 times more return on investment than Acco Brands. However, Kodiak Gas is 1.05 times more volatile than Acco Brands. It trades about 0.26 of its potential returns per unit of risk. Acco Brands is currently generating about -0.14 per unit of risk. If you would invest  3,483  in Kodiak Gas Services, on October 7, 2024 and sell it today you would earn a total of  883.00  from holding Kodiak Gas Services, or generate 25.35% return on investment over 90 days.

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

Kodiak Gas Services,  vs.  Acco Brands

Kodiak Gas Services,

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kodiak Gas Services, are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, Kodiak Gas unveiled solid returns over the last few months and may actually be approaching a breakup point.

Acco Brands

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Acco Brands are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Acco Brands is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Kodiak Gas and Acco Brands

The main advantage of trading using opposite Kodiak Gas and Acco Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kodiak Gas 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 Kodiak Gas Services, 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.