Correlation Between Spectrum Brands and Acme United
Can any of the company-specific risk be diversified away by investing in both Spectrum Brands 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 Spectrum Brands and Acme United into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spectrum Brands Holdings and Acme United, you can compare the effects of market volatilities on Spectrum Brands 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 Spectrum Brands with a short position of Acme United. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spectrum Brands and Acme United.
Diversification Opportunities for Spectrum Brands and Acme United
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Spectrum and Acme is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Spectrum Brands Holdings and Acme United in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acme United and Spectrum Brands 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 Spectrum Brands Holdings 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 Spectrum Brands i.e., Spectrum Brands and Acme United go up and down completely randomly.
Pair Corralation between Spectrum Brands and Acme United
Considering the 90-day investment horizon Spectrum Brands is expected to generate 8.7 times less return on investment than Acme United. But when comparing it to its historical volatility, Spectrum Brands Holdings is 1.44 times less risky than Acme United. It trades about 0.01 of its potential returns per unit of risk. Acme United is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 3,571 in Acme United on August 24, 2024 and sell it today you would earn a total of 606.00 from holding Acme United or generate 16.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spectrum Brands Holdings vs. Acme United
Performance |
| Timeline |
| Spectrum Brands Holdings |
| Acme United |
Spectrum Brands and Acme United Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spectrum Brands and Acme United
The main advantage of trading using opposite Spectrum Brands and Acme United positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spectrum Brands 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.| Spectrum Brands vs. European Wax Center | Spectrum Brands vs. Inter Parfums | Spectrum Brands vs. Mannatech Incorporated | Spectrum Brands vs. Nu Skin Enterprises |
| 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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