Correlation Between Duckhorn Portfolio and Acuity Brands

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

Diversification Opportunities for Duckhorn Portfolio and Acuity Brands

0.14
  Correlation Coefficient

Average diversification

The 3 months correlation between Duckhorn and Acuity is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Duckhorn Portfolio and Acuity Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acuity Brands and Duckhorn Portfolio 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 Duckhorn Portfolio 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 Duckhorn Portfolio i.e., Duckhorn Portfolio and Acuity Brands go up and down completely randomly.

Pair Corralation between Duckhorn Portfolio and Acuity Brands

Given the investment horizon of 90 days Duckhorn Portfolio is expected to under-perform the Acuity Brands. In addition to that, Duckhorn Portfolio is 1.42 times more volatile than Acuity Brands. It trades about -0.21 of its total potential returns per unit of risk. Acuity Brands is currently generating about -0.15 per unit of volatility. If you would invest  26,264  in Acuity Brands on January 17, 2024 and sell it today you would lose (1,017) from holding Acuity Brands or give up 3.87% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy95.45%
ValuesDaily Returns

Duckhorn Portfolio  vs.  Acuity Brands

 Performance 
       Timeline  
Duckhorn Portfolio 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Duckhorn Portfolio has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Duckhorn Portfolio is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.
Acuity Brands 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Acuity Brands are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, Acuity Brands demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Duckhorn Portfolio and Acuity Brands Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Duckhorn Portfolio and Acuity Brands

The main advantage of trading using opposite Duckhorn Portfolio and Acuity Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Duckhorn Portfolio 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 Duckhorn Portfolio 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.

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