Correlation Between East Africa and Allegion PLC
Can any of the company-specific risk be diversified away by investing in both East Africa and Allegion PLC 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 East Africa and Allegion PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between East Africa Metals and Allegion PLC, you can compare the effects of market volatilities on East Africa and Allegion PLC 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 East Africa with a short position of Allegion PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of East Africa and Allegion PLC.
Diversification Opportunities for East Africa and Allegion PLC
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between East and Allegion is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding East Africa Metals and Allegion PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegion PLC and East Africa 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 East Africa Metals are associated (or correlated) with Allegion PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allegion PLC has no effect on the direction of East Africa i.e., East Africa and Allegion PLC go up and down completely randomly.
Pair Corralation between East Africa and Allegion PLC
Assuming the 90 days horizon East Africa Metals is expected to generate 41.91 times more return on investment than Allegion PLC. However, East Africa is 41.91 times more volatile than Allegion PLC. It trades about 0.08 of its potential returns per unit of risk. Allegion PLC is currently generating about 0.03 per unit of risk. If you would invest 9.89 in East Africa Metals on November 9, 2024 and sell it today you would earn a total of 1.11 from holding East Africa Metals or generate 11.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
East Africa Metals vs. Allegion PLC
Performance |
| Timeline |
| East Africa Metals |
| Allegion PLC |
East Africa and Allegion PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with East Africa and Allegion PLC
The main advantage of trading using opposite East Africa and Allegion PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if East Africa position performs unexpectedly, Allegion PLC 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 Allegion PLC will offset losses from the drop in Allegion PLC's long position.| East Africa vs. Pasinex Resources Limited | East Africa vs. Commander Resources | East Africa vs. Forsys Metals Corp | East Africa vs. American CuMo Mining |
| Allegion PLC vs. MSA Safety | Allegion PLC vs. Resideo Technologies | Allegion PLC vs. NL Industries | Allegion PLC vs. Brady |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |