Correlation Between Acuity Brands and Enovix Corp
Can any of the company-specific risk be diversified away by investing in both Acuity Brands and Enovix 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 Acuity Brands and Enovix Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Acuity Brands and Enovix Corp, you can compare the effects of market volatilities on Acuity Brands and Enovix 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 Acuity Brands with a short position of Enovix Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acuity Brands and Enovix Corp.
Diversification Opportunities for Acuity Brands and Enovix Corp
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Acuity and Enovix is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Acuity Brands and Enovix Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enovix Corp and Acuity 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 Acuity Brands are associated (or correlated) with Enovix Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enovix Corp has no effect on the direction of Acuity Brands i.e., Acuity Brands and Enovix Corp go up and down completely randomly.
Pair Corralation between Acuity Brands and Enovix Corp
Considering the 90-day investment horizon Acuity Brands is expected to generate 0.3 times more return on investment than Enovix Corp. However, Acuity Brands is 3.35 times less risky than Enovix Corp. It trades about 0.07 of its potential returns per unit of risk. Enovix Corp is currently generating about 0.02 per unit of risk. If you would invest 18,800 in Acuity Brands on August 23, 2024 and sell it today you would earn a total of 13,241 from holding Acuity Brands or generate 70.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Acuity Brands vs. Enovix Corp
Performance |
| Timeline |
| Acuity Brands |
| Enovix Corp |
Acuity Brands and Enovix Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Acuity Brands and Enovix Corp
The main advantage of trading using opposite Acuity Brands and Enovix Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acuity Brands position performs unexpectedly, Enovix 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 Enovix Corp will offset losses from the drop in Enovix Corp's long position.| Acuity Brands vs. Energizer Holdings | Acuity Brands vs. Espey Mfg Electronics | Acuity Brands vs. Preformed Line Products | Acuity Brands vs. nVent Electric PLC |
| Enovix Corp vs. ESS Tech | Enovix Corp vs. FREYR Battery SA | Enovix Corp vs. Microvast Holdings | Enovix Corp vs. Eos Energy Enterprises |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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