Correlation Between Compass Diversified and Acco Brands
Can any of the company-specific risk be diversified away by investing in both Compass Diversified and Acco Brands 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 Compass Diversified and Acco Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compass Diversified and Acco Brands, you can compare the effects of market volatilities on Compass Diversified and Acco Brands 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 Compass Diversified with a short position of Acco Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compass Diversified and Acco Brands.
Diversification Opportunities for Compass Diversified and Acco Brands
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Compass and Acco is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Compass Diversified and Acco Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acco Brands and Compass Diversified 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 Compass Diversified are associated (or correlated) with Acco Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acco Brands has no effect on the direction of Compass Diversified i.e., Compass Diversified and Acco Brands go up and down completely randomly.
Pair Corralation between Compass Diversified and Acco Brands
Assuming the 90 days trading horizon Compass Diversified is expected to under-perform the Acco Brands. But the preferred stock apears to be less risky and, when comparing its historical volatility, Compass Diversified is 2.5 times less risky than Acco Brands. The preferred stock trades about -0.2 of its potential returns per unit of risk. The Acco Brands is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 511.00 in Acco Brands on November 9, 2024 and sell it today you would lose (1.00) from holding Acco Brands or give up 0.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compass Diversified vs. Acco Brands
Performance |
| Timeline |
| Compass Diversified |
| Acco Brands |
Compass Diversified and Acco Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compass Diversified and Acco Brands
The main advantage of trading using opposite Compass Diversified and Acco Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compass Diversified position performs unexpectedly, Acco Brands 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 Acco Brands will offset losses from the drop in Acco Brands' long position.| Compass Diversified vs. Compass Diversified | Compass Diversified vs. Compass Diversified | Compass Diversified vs. Chimera Investment | Compass Diversified vs. ARMOUR Residential REIT |
| 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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