diversifiable risk of combining Enersys and Acuity Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enersys and Acuity Brands, you can compare the effects of market volatilities on Enersys 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 Enersys with a short position of Acuity Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enersys and Acuity Brands.
Diversification Opportunities for Enersys and Acuity Brands
Pair Corralation between Enersys and Acuity Brands
Considering the 90-day investment horizon Enersys is expected to generate 1.08 times more return on investment than Acuity Brands. However, Enersys is 1.08 times more volatile than Acuity Brands. It trades about 0.03 of its potential returns per unit of risk. Acuity Brands is currently generating about 0.04 per unit of risk. If you would invest 6,993 in Enersys on November 24, 2023 and sell it today you would earn a total of 2,047 from holding Enersys or generate 29.27% return on investment over 90 days.
Enersys vs. Acuity Brands
Enersys and Acuity Brands Volatility Contrast
Pair Trading with Enersys and Acuity BrandsThe main advantage of trading using opposite Enersys and Acuity Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enersys 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 Enersys 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.
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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