Correlation Between Acco Brands and Hooker Furniture
Can any of the company-specific risk be diversified away by investing in both Acco Brands and Hooker Furniture 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 Hooker Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Acco Brands and Hooker Furniture, you can compare the effects of market volatilities on Acco Brands and Hooker Furniture 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 Hooker Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acco Brands and Hooker Furniture.
Diversification Opportunities for Acco Brands and Hooker Furniture
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Acco and Hooker is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Acco Brands and Hooker Furniture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hooker Furniture 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 Hooker Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hooker Furniture has no effect on the direction of Acco Brands i.e., Acco Brands and Hooker Furniture go up and down completely randomly.
Pair Corralation between Acco Brands and Hooker Furniture
Given the investment horizon of 90 days Acco Brands is expected to generate 0.99 times more return on investment than Hooker Furniture. However, Acco Brands is 1.02 times less risky than Hooker Furniture. It trades about 0.05 of its potential returns per unit of risk. Hooker Furniture is currently generating about -0.19 per unit of risk. If you would invest 519.00 in Acco Brands on November 3, 2024 and sell it today you would earn a total of 7.00 from holding Acco Brands or generate 1.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Acco Brands vs. Hooker Furniture
Performance |
| Timeline |
| Acco Brands |
| Hooker Furniture |
Acco Brands and Hooker Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Acco Brands and Hooker Furniture
The main advantage of trading using opposite Acco Brands and Hooker Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acco Brands position performs unexpectedly, Hooker Furniture 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 Hooker Furniture will offset losses from the drop in Hooker Furniture's long position.| Acco Brands vs. HNI Corp | Acco Brands vs. Steelcase | Acco Brands vs. Ennis Inc | Acco Brands vs. Acacia Research |
| Hooker Furniture vs. Bassett Furniture Industries | Hooker Furniture vs. Natuzzi SpA | Hooker Furniture vs. Flexsteel Industries | Hooker Furniture vs. Hamilton Beach Brands |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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