Correlation Between Energizer Holdings and Acuity Brands

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

By analyzing existing cross correlation between Energizer Holdings and Acuity Brands, you can compare the effects of market volatilities on Energizer Holdings 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 Energizer Holdings with a short position of Acuity Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energizer Holdings and Acuity Brands.

Diversification Opportunities for Energizer Holdings and Acuity Brands

-0.73

Correlation Coefficient

Energizer Holdings  Acuity Brands

Pay attention - limited upside

The 3 months correlation between Energizer and Acuity is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Energizer Holdings and Acuity Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acuity Brands and Energizer Holdings 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 Energizer 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 Energizer Holdings i.e., Energizer Holdings and Acuity Brands go up and down completely randomly.

Pair Corralation between Energizer Holdings and Acuity Brands

Considering the 90-day investment horizon Energizer Holdings is expected to generate 0.81 times more return on investment than Acuity Brands. However, Energizer Holdings is 1.24 times less risky than Acuity Brands. It trades about 0.02 of its potential returns per unit of risk. Acuity Brands is currently generating about -0.2 per unit of risk. If you would invest  2,869  in Energizer Holdings on February 2, 2024 and sell it today you would earn a total of  7.00  from holding Energizer Holdings or generate 0.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Energizer Holdings  vs.  Acuity Brands

Energizer Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Energizer Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest inconsistent performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Acuity Brands

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Acuity Brands are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Acuity Brands is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Energizer Holdings and Acuity Brands

The main advantage of trading using opposite Energizer Holdings and Acuity Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energizer Holdings 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.

The idea behind Energizer Holdings and Acuity Brands 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.