Correlation Between Acco Brands and Expand Energy
Can any of the company-specific risk be diversified away by investing in both Acco Brands and Expand Energy 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 Acco Brands and Expand Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Acco Brands and Expand Energy, you can compare the effects of market volatilities on Acco Brands and Expand Energy 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 Acco Brands with a short position of Expand Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acco Brands and Expand Energy.
Diversification Opportunities for Acco Brands and Expand Energy
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Acco and Expand is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Acco Brands and Expand Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Expand Energy and Acco Brands 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 Acco Brands are associated (or correlated) with Expand Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Expand Energy has no effect on the direction of Acco Brands i.e., Acco Brands and Expand Energy go up and down completely randomly.
Pair Corralation between Acco Brands and Expand Energy
Given the investment horizon of 90 days Acco Brands is expected to generate 3.12 times less return on investment than Expand Energy. In addition to that, Acco Brands is 1.22 times more volatile than Expand Energy. It trades about 0.08 of its total potential returns per unit of risk. Expand Energy is currently generating about 0.29 per unit of volatility. If you would invest 7,176 in Expand Energy on September 2, 2024 and sell it today you would earn a total of 2,720 from holding Expand Energy or generate 37.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Acco Brands vs. Expand Energy
Performance |
| Timeline |
| Acco Brands |
| Expand Energy |
Acco Brands and Expand Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Acco Brands and Expand Energy
The main advantage of trading using opposite Acco Brands and Expand Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acco Brands position performs unexpectedly, Expand Energy 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 Expand Energy will offset losses from the drop in Expand Energy's long position.| Acco Brands vs. HNI Corp | Acco Brands vs. Steelcase | Acco Brands vs. Ennis Inc | Acco Brands vs. Acacia Research |
| Expand Energy vs. Dine Brands Global | Expand Energy vs. Playa Hotels Resorts | Expand Energy vs. Meli Hotels International | Expand Energy vs. Analog Devices |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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