Correlation Between Steelcase and Acacia Research

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

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

Diversification Opportunities for Steelcase and Acacia Research

0.67

Correlation Coefficient

Steelcase  Acacia Research

Poor diversification

The 3 months correlation between Steelcase and Acacia is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Steelcase and Acacia Research in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acacia Research and Steelcase 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 Steelcase are associated (or correlated) with Acacia Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acacia Research has no effect on the direction of Steelcase i.e., Steelcase and Acacia Research go up and down completely randomly.

Pair Corralation between Steelcase and Acacia Research

Considering the 90-day investment horizon Steelcase is expected to under-perform the Acacia Research. In addition to that, Steelcase is 1.38 times more volatile than Acacia Research. It trades about -0.08 of its total potential returns per unit of risk. Acacia Research is currently generating about -0.08 per unit of volatility. If you would invest  455.00  in Acacia Research on November 29, 2024 and sell it today you would lose (31.00) from holding Acacia Research or give up 6.81% of portfolio value over 90 days.

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

Steelcase  vs.  Acacia Research

Steelcase

Risk-Adjusted Performance

Very Weak

Over the last 90 days Steelcase has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Acacia Research

Risk-Adjusted Performance

Very Weak

Over the last 90 days Acacia Research has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile 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.

Pair Trading with Steelcase and Acacia Research

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

The idea behind Steelcase and Acacia Research 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.