Correlation Between Servotronics and Acuity Brands
Can any of the company-specific risk be diversified away by investing in both Servotronics 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 Servotronics and Acuity Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Servotronics and Acuity Brands, you can compare the effects of market volatilities on Servotronics 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 Servotronics with a short position of Acuity Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Servotronics and Acuity Brands.
Diversification Opportunities for Servotronics and Acuity Brands
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Servotronics and Acuity is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Servotronics and Acuity Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acuity Brands and Servotronics 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 Servotronics 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 Servotronics i.e., Servotronics and Acuity Brands go up and down completely randomly.
Pair Corralation between Servotronics and Acuity Brands
Considering the 90-day investment horizon Servotronics is expected to generate 26.79 times more return on investment than Acuity Brands. However, Servotronics is 26.79 times more volatile than Acuity Brands. It trades about 0.04 of its potential returns per unit of risk. Acuity Brands is currently generating about 0.08 per unit of risk. If you would invest 1,075 in Servotronics on August 31, 2024 and sell it today you would earn a total of 32.00 from holding Servotronics or generate 2.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 92.24% |
| Values | Daily Returns |
Servotronics vs. Acuity Brands
Performance |
| Timeline |
| Servotronics |
| Acuity Brands |
Servotronics and Acuity Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Servotronics and Acuity Brands
The main advantage of trading using opposite Servotronics and Acuity Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Servotronics 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.| Servotronics vs. Energizer Holdings | Servotronics vs. Acuity Brands | Servotronics vs. Espey Mfg Electronics | Servotronics vs. Preformed Line Products |
| 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 CEOs Directory module to screen CEOs from public companies around the world.
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