Correlation Between SMX Public and Acco Brands

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

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

Diversification Opportunities for SMX Public and Acco Brands

-0.51

Correlation Coefficient

SMX Public  Acco Brands

Excellent diversification

The 3 months correlation between SMX and Acco is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding SMX Public Limited and Acco Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acco Brands and SMX Public 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 SMX Public Limited 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 SMX Public i.e., SMX Public and Acco Brands go up and down completely randomly.

Pair Corralation between SMX Public and Acco Brands

Considering the 90-day investment horizon SMX Public Limited is expected to under-perform the Acco Brands. In addition to that, SMX Public is 6.82 times more volatile than Acco Brands. It trades about -0.09 of its total potential returns per unit of risk. Acco Brands is currently generating about 0.03 per unit of volatility. If you would invest  481.00  in Acco Brands on August 31, 2024 and sell it today you would earn a total of  101.00  from holding Acco Brands or generate 21.0% return on investment over 90 days.

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

SMX Public Limited  vs.  Acco Brands

SMX Public Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SMX Public Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's primary indicators remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Acco Brands

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Acco Brands are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent fundamental indicators, Acco Brands may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with SMX Public and Acco Brands

The main advantage of trading using opposite SMX Public and Acco Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMX Public 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 SMX Public Limited 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.