Correlation Between Acco Brands and HNI Corp

Can any of the company-specific risk be diversified away by investing in both Acco Brands and HNI Corp 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 Acco Brands and HNI Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Acco Brands and HNI Corp, you can compare the effects of market volatilities on Acco Brands and HNI Corp 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 Acco Brands with a short position of HNI Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acco Brands and HNI Corp.

Diversification Opportunities for Acco Brands and HNI Corp

0.61

Correlation Coefficient

Acco Brands  HNI Corp

Poor diversification

The 3 months correlation between Acco and HNI is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Acco Brands and HNI Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HNI Corp and Acco 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 Acco Brands are associated (or correlated) with HNI Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HNI Corp has no effect on the direction of Acco Brands i.e., Acco Brands and HNI Corp go up and down completely randomly.

Pair Corralation between Acco Brands and HNI Corp

Given the investment horizon of 90 days Acco Brands is expected to generate 1.34 times less return on investment than HNI Corp. In addition to that, Acco Brands is 1.06 times more volatile than HNI Corp. It trades about 0.06 of its total potential returns per unit of risk. HNI Corp is currently generating about 0.09 per unit of volatility. If you would invest  4,945  in HNI Corp on July 21, 2024 and sell it today you would earn a total of  519.00  from holding HNI Corp or generate 10.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Acco Brands  vs.  HNI Corp

Acco Brands

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Acco Brands are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent fundamental indicators, Acco Brands may actually be approaching a critical reversion point that can send shares even higher in November 2024.

HNI Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HNI Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, HNI Corp may actually be approaching a critical reversion point that can send shares even higher in November 2024.

Pair Trading with Acco Brands and HNI Corp

The main advantage of trading using opposite Acco Brands and HNI Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acco Brands position performs unexpectedly, HNI Corp 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 HNI Corp will offset losses from the drop in HNI Corp's long position.

The idea behind Acco Brands and HNI Corp 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.

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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.