Correlation Between Acme United and Eastern
Can any of the company-specific risk be diversified away by investing in both Acme United and Eastern 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 Acme United and Eastern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Acme United and Eastern Co, you can compare the effects of market volatilities on Acme United and Eastern 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 Acme United with a short position of Eastern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acme United and Eastern.
Diversification Opportunities for Acme United and Eastern
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Acme and Eastern is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Acme United and Eastern Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern and Acme United 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 Acme United are associated (or correlated) with Eastern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern has no effect on the direction of Acme United i.e., Acme United and Eastern go up and down completely randomly.
Pair Corralation between Acme United and Eastern
Considering the 90-day investment horizon Acme United is expected to generate 0.64 times more return on investment than Eastern. However, Acme United is 1.56 times less risky than Eastern. It trades about 0.15 of its potential returns per unit of risk. Eastern Co is currently generating about -0.18 per unit of risk. If you would invest 4,060 in Acme United on August 24, 2024 and sell it today you would earn a total of 236.00 from holding Acme United or generate 5.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Acme United vs. Eastern Co
Performance |
| Timeline |
| Acme United |
| Eastern |
Acme United and Eastern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Acme United and Eastern
The main advantage of trading using opposite Acme United and Eastern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acme United position performs unexpectedly, Eastern 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 Eastern will offset losses from the drop in Eastern's long position.| Acme United vs. Mannatech Incorporated | Acme United vs. European Wax Center | Acme United vs. Inter Parfums | Acme United vs. Spectrum Brands Holdings |
| Eastern vs. Timken Company | Eastern vs. Lincoln Electric Holdings | Eastern vs. Hillman Solutions Corp | Eastern vs. AB SKF |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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