Correlation Between Flux Power and Acuity Brands
Can any of the company-specific risk be diversified away by investing in both Flux Power and Acuity Brands 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 Flux Power and Acuity Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flux Power Holdings and Acuity Brands, you can compare the effects of market volatilities on Flux Power and Acuity Brands 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 Flux Power with a short position of Acuity Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flux Power and Acuity Brands.
Diversification Opportunities for Flux Power and Acuity Brands
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Flux and Acuity is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Flux Power Holdings and Acuity Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acuity Brands and Flux Power 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 Flux Power Holdings are associated (or correlated) with Acuity Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acuity Brands has no effect on the direction of Flux Power i.e., Flux Power and Acuity Brands go up and down completely randomly.
Pair Corralation between Flux Power and Acuity Brands
Given the investment horizon of 90 days Flux Power Holdings is expected to under-perform the Acuity Brands. In addition to that, Flux Power is 2.03 times more volatile than Acuity Brands. It trades about -0.13 of its total potential returns per unit of risk. Acuity Brands is currently generating about 0.0 per unit of volatility. If you would invest 33,019 in Acuity Brands on November 18, 2024 and sell it today you would lose (110.00) from holding Acuity Brands or give up 0.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flux Power Holdings vs. Acuity Brands
Performance |
| Timeline |
| Flux Power Holdings |
| Acuity Brands |
Flux Power and Acuity Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flux Power and Acuity Brands
The main advantage of trading using opposite Flux Power and Acuity Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flux Power position performs unexpectedly, Acuity Brands 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 Acuity Brands will offset losses from the drop in Acuity Brands' long position.| Flux Power vs. Espey Mfg Electronics | Flux Power vs. NeoVolta Warrant | Flux Power vs. Kimball Electronics | Flux Power vs. Hayward Holdings |
| Acuity Brands vs. Energizer Holdings | Acuity Brands vs. Espey Mfg Electronics | Acuity Brands vs. Preformed Line Products | Acuity Brands vs. nVent Electric PLC |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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