Correlation Between SFL and Acme United
Can any of the company-specific risk be diversified away by investing in both SFL 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 SFL and Acme United into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SFL Corporation and Acme United, you can compare the effects of market volatilities on SFL 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 SFL with a short position of Acme United. Check out your portfolio center. Please also check ongoing floating volatility patterns of SFL and Acme United.
Diversification Opportunities for SFL and Acme United
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between SFL and Acme is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding SFL Corp. and Acme United in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acme United and SFL 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 SFL 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 SFL i.e., SFL and Acme United go up and down completely randomly.
Pair Corralation between SFL and Acme United
Considering the 90-day investment horizon SFL Corporation is expected to under-perform the Acme United. But the stock apears to be less risky and, when comparing its historical volatility, SFL Corporation is 1.38 times less risky than Acme United. The stock trades about -0.04 of its potential returns per unit of risk. The Acme United is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 4,353 in Acme United on August 23, 2024 and sell it today you would lose (176.00) from holding Acme United or give up 4.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SFL Corp. vs. Acme United
Performance |
| Timeline |
| SFL Corporation |
| Acme United |
SFL and Acme United Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SFL and Acme United
The main advantage of trading using opposite SFL and Acme United positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SFL 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 SFL 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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