Correlation Between Acuity Brands and Servotronics
Can any of the company-specific risk be diversified away by investing in both Acuity Brands and Servotronics 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 Servotronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Acuity Brands and Servotronics, you can compare the effects of market volatilities on Acuity Brands and Servotronics 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 Servotronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acuity Brands and Servotronics.
Diversification Opportunities for Acuity Brands and Servotronics
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Acuity and Servotronics is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Acuity Brands and Servotronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Servotronics 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 Servotronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Servotronics has no effect on the direction of Acuity Brands i.e., Acuity Brands and Servotronics go up and down completely randomly.
Pair Corralation between Acuity Brands and Servotronics
Considering the 90-day investment horizon Acuity Brands is expected to generate 14.91 times less return on investment than Servotronics. But when comparing it to its historical volatility, Acuity Brands is 26.22 times less risky than Servotronics. It trades about 0.08 of its potential returns per unit of risk. Servotronics is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,110 in Servotronics on August 24, 2024 and sell it today you would earn a total of 33.00 from holding Servotronics or generate 2.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 92.34% |
| Values | Daily Returns |
Acuity Brands vs. Servotronics
Performance |
| Timeline |
| Acuity Brands |
| Servotronics |
Acuity Brands and Servotronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Acuity Brands and Servotronics
The main advantage of trading using opposite Acuity Brands and Servotronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acuity Brands position performs unexpectedly, Servotronics 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 Servotronics will offset losses from the drop in Servotronics' 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 |
| Servotronics vs. Energizer Holdings | Servotronics vs. Acuity Brands | Servotronics vs. Espey Mfg Electronics | Servotronics vs. Preformed Line Products |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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