Correlation Between Acuity Brands and Drone Delivery

Can any of the company-specific risk be diversified away by investing in both Acuity Brands and Drone Delivery 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 Drone Delivery into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Acuity Brands and Drone Delivery Canada, you can compare the effects of market volatilities on Acuity Brands and Drone Delivery 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 Drone Delivery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acuity Brands and Drone Delivery.

Diversification Opportunities for Acuity Brands and Drone Delivery

0.81

Correlation Coefficient

Acuity Brands  Drone Delivery

Very poor diversification

The 3 months correlation between Acuity and Drone is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Acuity Brands and Drone Delivery Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Drone Delivery Canada 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 Drone Delivery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Drone Delivery Canada has no effect on the direction of Acuity Brands i.e., Acuity Brands and Drone Delivery go up and down completely randomly.

Pair Corralation between Acuity Brands and Drone Delivery

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 Together
Strength	Strong
Accuracy	1.59%
Values	Daily Returns

Acuity Brands  vs.  Drone Delivery Canada

Acuity Brands

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Acuity Brands are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Acuity Brands demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Drone Delivery Canada

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Drone Delivery Canada has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Drone Delivery is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Acuity Brands and Drone Delivery

The main advantage of trading using opposite Acuity Brands and Drone Delivery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acuity Brands position performs unexpectedly, Drone Delivery 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 Drone Delivery will offset losses from the drop in Drone Delivery's long position.

The idea behind Acuity Brands and Drone Delivery Canada pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Global Correlations module to find global opportunities by holding instruments from different markets.