Correlation Between ASSA ABLOY and MSA Safety
Can any of the company-specific risk be diversified away by investing in both ASSA ABLOY and MSA Safety 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 ASSA ABLOY and MSA Safety into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ASSA ABLOY AB and MSA Safety Incorporated, you can compare the effects of market volatilities on ASSA ABLOY and MSA Safety 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 ASSA ABLOY with a short position of MSA Safety. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASSA ABLOY and MSA Safety.
Diversification Opportunities for ASSA ABLOY and MSA Safety
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ASSA and MSA is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding ASSA ABLOY AB and MSA Safety Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MSA Safety and ASSA ABLOY 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 ASSA ABLOY AB are associated (or correlated) with MSA Safety. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MSA Safety has no effect on the direction of ASSA ABLOY i.e., ASSA ABLOY and MSA Safety go up and down completely randomly.
Pair Corralation between ASSA ABLOY and MSA Safety
Assuming the 90 days trading horizon ASSA ABLOY AB is expected to generate 0.77 times more return on investment than MSA Safety. However, ASSA ABLOY AB is 1.3 times less risky than MSA Safety. It trades about 0.04 of its potential returns per unit of risk. MSA Safety Incorporated is currently generating about -0.14 per unit of risk. If you would invest 2,824 in ASSA ABLOY AB on September 28, 2024 and sell it today you would earn a total of 21.00 from holding ASSA ABLOY AB or generate 0.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ASSA ABLOY AB vs. MSA Safety Incorporated
Performance |
| Timeline |
| ASSA ABLOY AB |
| MSA Safety |
ASSA ABLOY and MSA Safety Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASSA ABLOY and MSA Safety
The main advantage of trading using opposite ASSA ABLOY and MSA Safety positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASSA ABLOY position performs unexpectedly, MSA Safety 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 MSA Safety will offset losses from the drop in MSA Safety's long position.| ASSA ABLOY vs. ABB PAR AB | ASSA ABLOY vs. SECOM LTD | ASSA ABLOY vs. Halma plc | ASSA ABLOY vs. Allegion plc |
| MSA Safety vs. ABB PAR AB | MSA Safety vs. ASSA ABLOY AB | MSA Safety vs. SECOM LTD | MSA Safety vs. Halma plc |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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