Correlation Between Strategic Education and ACCO BRANDS

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

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

Diversification Opportunities for Strategic Education and ACCO BRANDS

0.55

Correlation Coefficient

Strategic Education  ACCO BRANDS

Very weak diversification

The 3 months correlation between Strategic and ACCO is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Education and ACCO BRANDS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACCO BRANDS and Strategic Education 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 Strategic Education 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 Strategic Education i.e., Strategic Education and ACCO BRANDS go up and down completely randomly.

Pair Corralation between Strategic Education and ACCO BRANDS

Assuming the 90 days horizon Strategic Education is expected to generate 0.92 times more return on investment than ACCO BRANDS. However, Strategic Education is 1.08 times less risky than ACCO BRANDS. It trades about -0.09 of its potential returns per unit of risk. ACCO BRANDS is currently generating about -0.08 per unit of risk. If you would invest  8,786  in Strategic Education on December 21, 2024 and sell it today you would lose (1,336) from holding Strategic Education or give up 15.21% of portfolio value over 90 days.

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

Strategic Education  vs.  ACCO BRANDS

Strategic Education

Risk-Adjusted Performance

Very Weak

Over the last 90 days Strategic Education has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

ACCO BRANDS

Risk-Adjusted Performance

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 fragile performance in the last few months, the Stock's fundamental drivers remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Strategic Education and ACCO BRANDS

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

The idea behind Strategic Education 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.