Correlation Between Acuity Brands and Bloom Energy

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Can any of the company-specific risk be diversified away by investing in both Acuity Brands and Bloom Energy 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 Bloom Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Acuity Brands and Bloom Energy Corp, you can compare the effects of market volatilities on Acuity Brands and Bloom Energy 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 Bloom Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acuity Brands and Bloom Energy.

Diversification Opportunities for Acuity Brands and Bloom Energy

-0.84
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Acuity and Bloom is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Acuity Brands and Bloom Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bloom Energy Corp 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 Bloom Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bloom Energy Corp has no effect on the direction of Acuity Brands i.e., Acuity Brands and Bloom Energy go up and down completely randomly.

Pair Corralation between Acuity Brands and Bloom Energy

Considering the 90-day investment horizon Acuity Brands is expected to generate 0.45 times more return on investment than Bloom Energy. However, Acuity Brands is 2.22 times less risky than Bloom Energy. It trades about 0.09 of its potential returns per unit of risk. Bloom Energy Corp is currently generating about -0.04 per unit of risk. If you would invest  18,279  in Acuity Brands on December 29, 2023 and sell it today you would earn a total of  8,480  from holding Acuity Brands or generate 46.39% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Acuity Brands  vs.  Bloom Energy Corp

 Performance 
       Timeline  
Acuity Brands 

Risk-Adjusted Performance

18 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Acuity Brands are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Acuity Brands demonstrated solid returns over the last few months and may actually be approaching a breakup point.
Bloom Energy Corp 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Bloom Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Acuity Brands and Bloom Energy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Acuity Brands and Bloom Energy

The main advantage of trading using opposite Acuity Brands and Bloom Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acuity Brands position performs unexpectedly, Bloom Energy 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 Bloom Energy will offset losses from the drop in Bloom Energy's long position.
The idea behind Acuity Brands and Bloom Energy Corp 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..

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