Correlation Between Acco Brands and Steelcase
Can any of the company-specific risk be diversified away by investing in both Acco Brands and Steelcase 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 Steelcase into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Acco Brands and Steelcase, you can compare the effects of market volatilities on Acco Brands and Steelcase 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 Steelcase. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acco Brands and Steelcase.
Diversification Opportunities for Acco Brands and Steelcase
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Acco and Steelcase is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Acco Brands and Steelcase in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steelcase 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 Steelcase. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steelcase has no effect on the direction of Acco Brands i.e., Acco Brands and Steelcase go up and down completely randomly.
Pair Corralation between Acco Brands and Steelcase
Given the investment horizon of 90 days Acco Brands is expected to under-perform the Steelcase. But the stock apears to be less risky and, when comparing its historical volatility, Acco Brands is 1.08 times less risky than Steelcase. The stock trades about -0.01 of its potential returns per unit of risk. The Steelcase is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,120 in Steelcase on November 8, 2024 and sell it today you would earn a total of 38.00 from holding Steelcase or generate 3.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Acco Brands vs. Steelcase
Performance |
| Timeline |
| Acco Brands |
| Steelcase |
Acco Brands and Steelcase Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Acco Brands and Steelcase
The main advantage of trading using opposite Acco Brands and Steelcase positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acco Brands position performs unexpectedly, Steelcase 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 Steelcase will offset losses from the drop in Steelcase's long position.| Acco Brands vs. HNI Corp | Acco Brands vs. Steelcase | Acco Brands vs. Ennis Inc | Acco Brands vs. Acacia Research |
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.
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