Correlation Between Acco Brands and Lotus Technology
Can any of the company-specific risk be diversified away by investing in both Acco Brands and Lotus Technology 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 Lotus Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Acco Brands and Lotus Technology American, you can compare the effects of market volatilities on Acco Brands and Lotus Technology 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 Lotus Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acco Brands and Lotus Technology.
Diversification Opportunities for Acco Brands and Lotus Technology
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Acco and Lotus is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Acco Brands and Lotus Technology American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotus Technology American 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 Lotus Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotus Technology American has no effect on the direction of Acco Brands i.e., Acco Brands and Lotus Technology go up and down completely randomly.
Pair Corralation between Acco Brands and Lotus Technology
Given the investment horizon of 90 days Acco Brands is expected to under-perform the Lotus Technology. But the stock apears to be less risky and, when comparing its historical volatility, Acco Brands is 4.75 times less risky than Lotus Technology. The stock trades about -0.17 of its potential returns per unit of risk. The Lotus Technology American is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 353.00 in Lotus Technology American on October 20, 2024 and sell it today you would lose (6.00) from holding Lotus Technology American or give up 1.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Acco Brands vs. Lotus Technology American
Performance |
| Timeline |
| Acco Brands |
| Lotus Technology American |
Acco Brands and Lotus Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Acco Brands and Lotus Technology
The main advantage of trading using opposite Acco Brands and Lotus Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acco Brands position performs unexpectedly, Lotus Technology 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 Lotus Technology will offset losses from the drop in Lotus Technology's long position.| Acco Brands vs. HNI Corp | Acco Brands vs. Steelcase | Acco Brands vs. Ennis Inc | Acco Brands vs. Acacia Research |
| Lotus Technology vs. Precision Optics, | Lotus Technology vs. National Vision Holdings | Lotus Technology vs. Amgen Inc | Lotus Technology vs. Acco 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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