Correlation Between ACNB and Acme United
Can any of the company-specific risk be diversified away by investing in both ACNB and Acme United 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 ACNB and Acme United into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ACNB Corporation and Acme United, you can compare the effects of market volatilities on ACNB and Acme United 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 ACNB with a short position of Acme United. Check out your portfolio center. Please also check ongoing floating volatility patterns of ACNB and Acme United.
Diversification Opportunities for ACNB and Acme United
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between ACNB and Acme is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding ACNB Corp. and Acme United in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acme United and ACNB 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 ACNB Corporation are associated (or correlated) with Acme United. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acme United has no effect on the direction of ACNB i.e., ACNB and Acme United go up and down completely randomly.
Pair Corralation between ACNB and Acme United
Given the investment horizon of 90 days ACNB Corporation is expected to generate 1.25 times more return on investment than Acme United. However, ACNB is 1.25 times more volatile than Acme United. It trades about 0.12 of its potential returns per unit of risk. Acme United is currently generating about 0.06 per unit of risk. If you would invest 3,159 in ACNB Corporation on August 24, 2024 and sell it today you would earn a total of 1,603 from holding ACNB Corporation or generate 50.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ACNB Corp. vs. Acme United
Performance |
| Timeline |
| ACNB |
| Acme United |
ACNB and Acme United Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ACNB and Acme United
The main advantage of trading using opposite ACNB and Acme United positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ACNB position performs unexpectedly, Acme United 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 Acme United will offset losses from the drop in Acme United's long position.The idea behind ACNB Corporation and Acme United 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.| Acme United vs. Mannatech Incorporated | Acme United vs. European Wax Center | Acme United vs. Inter Parfums | Acme United vs. Spectrum Brands Holdings |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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