Correlation Between Acuity Brands and Ideal Power
Can any of the company-specific risk be diversified away by investing in both Acuity Brands and Ideal Power 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 Ideal Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Acuity Brands and Ideal Power, you can compare the effects of market volatilities on Acuity Brands and Ideal Power 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 Ideal Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acuity Brands and Ideal Power.
Diversification Opportunities for Acuity Brands and Ideal Power
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Acuity and Ideal is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Acuity Brands and Ideal Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ideal Power 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 Ideal Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ideal Power has no effect on the direction of Acuity Brands i.e., Acuity Brands and Ideal Power go up and down completely randomly.
Pair Corralation between Acuity Brands and Ideal Power
Considering the 90-day investment horizon Acuity Brands is expected to generate 0.44 times more return on investment than Ideal Power. However, Acuity Brands is 2.28 times less risky than Ideal Power. It trades about 0.26 of its potential returns per unit of risk. Ideal Power is currently generating about -0.08 per unit of risk. If you would invest 24,597 in Acuity Brands on August 31, 2024 and sell it today you would earn a total of 7,419 from holding Acuity Brands or generate 30.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Acuity Brands vs. Ideal Power
Performance |
| Timeline |
| Acuity Brands |
| Ideal Power |
Acuity Brands and Ideal Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Acuity Brands and Ideal Power
The main advantage of trading using opposite Acuity Brands and Ideal Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acuity Brands position performs unexpectedly, Ideal Power 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 Ideal Power will offset losses from the drop in Ideal Power'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 |
| Ideal Power vs. Energizer Holdings | Ideal Power vs. Kimball Electronics | Ideal Power vs. NeoVolta Common Stock | Ideal Power vs. Espey Mfg Electronics |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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