Correlation Between Transocean and Acco Brands

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

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

Diversification Opportunities for Transocean and Acco Brands

0.24

Correlation Coefficient

Transocean  Acco Brands

Modest diversification

The 3 months correlation between Transocean and Acco is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Transocean and Acco Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acco Brands and Transocean 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 Transocean 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 Transocean i.e., Transocean and Acco Brands go up and down completely randomly.

Pair Corralation between Transocean and Acco Brands

Considering the 90-day investment horizon Transocean is expected to generate 1.82 times more return on investment than Acco Brands. However, Transocean is 1.82 times more volatile than Acco Brands. It trades about 0.02 of its potential returns per unit of risk. Acco Brands is currently generating about -0.62 per unit of risk. If you would invest  398.00  in Transocean on October 11, 2024 and sell it today you would earn a total of  1.00  from holding Transocean or generate 0.25% return on investment over 90 days.

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

Transocean  vs.  Acco Brands

Transocean

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Transocean has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, Transocean 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

0 of 100

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 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 Transocean and Acco Brands

The main advantage of trading using opposite Transocean and Acco Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transocean 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 Transocean 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.