Correlation Between Steelcase and Acacia Research
Can any of the company-specific risk be diversified away by investing in both Steelcase and Acacia Research 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 Steelcase and Acacia Research into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steelcase and Acacia Research, you can compare the effects of market volatilities on Steelcase and Acacia Research 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 Steelcase with a short position of Acacia Research. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steelcase and Acacia Research.
Diversification Opportunities for Steelcase and Acacia Research
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Steelcase and Acacia is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Steelcase and Acacia Research in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acacia Research and Steelcase 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 Steelcase are associated (or correlated) with Acacia Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acacia Research has no effect on the direction of Steelcase i.e., Steelcase and Acacia Research go up and down completely randomly.
Pair Corralation between Steelcase and Acacia Research
Considering the 90-day investment horizon Steelcase is expected to generate 1.42 times more return on investment than Acacia Research. However, Steelcase is 1.42 times more volatile than Acacia Research. It trades about 0.08 of its potential returns per unit of risk. Acacia Research is currently generating about 0.04 per unit of risk. If you would invest 1,130 in Steelcase on November 9, 2024 and sell it today you would earn a total of 28.00 from holding Steelcase or generate 2.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Steelcase vs. Acacia Research
Performance |
| Timeline |
| Steelcase |
| Acacia Research |
Steelcase and Acacia Research Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steelcase and Acacia Research
The main advantage of trading using opposite Steelcase and Acacia Research positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steelcase position performs unexpectedly, Acacia Research 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 Acacia Research will offset losses from the drop in Acacia Research's long position.The idea behind Steelcase and Acacia Research 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.| Acacia Research vs. Ennis Inc | Acacia Research vs. HNI Corp | Acacia Research vs. Steelcase | Acacia Research 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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