Correlation Between ASSA ABLOY and Brinks
Can any of the company-specific risk be diversified away by investing in both ASSA ABLOY and Brinks 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 Brinks 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 The Brinks, you can compare the effects of market volatilities on ASSA ABLOY and Brinks 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 Brinks. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASSA ABLOY and Brinks.
Diversification Opportunities for ASSA ABLOY and Brinks
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ASSA and Brinks is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding ASSA ABLOY AB and The Brinks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brinks 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 Brinks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brinks has no effect on the direction of ASSA ABLOY i.e., ASSA ABLOY and Brinks go up and down completely randomly.
Pair Corralation between ASSA ABLOY and Brinks
Assuming the 90 days trading horizon ASSA ABLOY AB is expected to generate 0.8 times more return on investment than Brinks. However, ASSA ABLOY AB is 1.25 times less risky than Brinks. It trades about 0.04 of its potential returns per unit of risk. The Brinks is currently generating about -0.13 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 Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ASSA ABLOY AB vs. The Brinks
Performance |
| Timeline |
| ASSA ABLOY AB |
| Brinks |
ASSA ABLOY and Brinks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASSA ABLOY and Brinks
The main advantage of trading using opposite ASSA ABLOY and Brinks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASSA ABLOY position performs unexpectedly, Brinks 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 Brinks will offset losses from the drop in Brinks' long position.| ASSA ABLOY vs. ABB PAR AB | ASSA ABLOY vs. SECOM LTD | ASSA ABLOY vs. Halma plc | ASSA ABLOY vs. Allegion 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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