Correlation Between Acuity Brands and Polar Power
Can any of the company-specific risk be diversified away by investing in both Acuity Brands and Polar 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 Polar 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 Polar Power, you can compare the effects of market volatilities on Acuity Brands and Polar 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 Polar Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acuity Brands and Polar Power.
Diversification Opportunities for Acuity Brands and Polar Power
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Acuity and Polar is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Acuity Brands and Polar Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polar 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 Polar Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polar Power has no effect on the direction of Acuity Brands i.e., Acuity Brands and Polar Power go up and down completely randomly.
Pair Corralation between Acuity Brands and Polar Power
Considering the 90-day investment horizon Acuity Brands is expected to generate 0.16 times more return on investment than Polar Power. However, Acuity Brands is 6.31 times less risky than Polar Power. It trades about -0.11 of its potential returns per unit of risk. Polar Power is currently generating about -0.04 per unit of risk. If you would invest 33,188 in Acuity Brands on September 13, 2024 and sell it today you would lose (910.00) from holding Acuity Brands or give up 2.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Acuity Brands vs. Polar Power
Performance |
| Timeline |
| Acuity Brands |
| Polar Power |
Acuity Brands and Polar Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Acuity Brands and Polar Power
The main advantage of trading using opposite Acuity Brands and Polar Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acuity Brands position performs unexpectedly, Polar 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 Polar Power will offset losses from the drop in Polar 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 |
| Polar Power vs. CBAK Energy Technology | Polar Power vs. Ocean Power Technologies | Polar Power vs. Enersys | Polar Power vs. Flux Power 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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