Correlation Between Acco Brands and NL Industries

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

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

Diversification Opportunities for Acco Brands and NL Industries

-0.12

Correlation Coefficient

Acco Brands  NL Industries

Good diversification

The 3 months correlation between Acco and NL Industries is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Acco Brands and NL Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NL Industries 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 NL Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NL Industries has no effect on the direction of Acco Brands i.e., Acco Brands and NL Industries go up and down completely randomly.

Pair Corralation between Acco Brands and NL Industries

Given the investment horizon of 90 days Acco Brands is expected to under-perform the NL Industries. But the stock apears to be less risky and, when comparing its historical volatility, Acco Brands is 1.01 times less risky than NL Industries. The stock trades about -0.06 of its potential returns per unit of risk. The NL Industries is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  689.00  in NL Industries on May 8, 2025 and sell it today you would lose (93.00) from holding NL Industries or give up 13.5% of portfolio value over 90 days.

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

Acco Brands  vs.  NL Industries

Acco Brands

Risk-Adjusted Performance

Weak

Over the last 90 days Acco Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Acco Brands is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

NL Industries

Risk-Adjusted Performance

Weakest

Over the last 90 days NL Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in September 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Acco Brands and NL Industries

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

The idea behind Acco Brands and NL Industries 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 AI Portfolio Prophet module to use AI to generate optimal portfolios and find profitable investment opportunities.