Correlation Between MSA Safety and Halma Plc
Can any of the company-specific risk be diversified away by investing in both MSA Safety and Halma 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 MSA Safety and Halma Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MSA Safety Incorporated and Halma plc, you can compare the effects of market volatilities on MSA Safety and Halma 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 MSA Safety with a short position of Halma Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of MSA Safety and Halma Plc.
Diversification Opportunities for MSA Safety and Halma Plc
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MSA and Halma is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding MSA Safety Incorporated and Halma plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halma plc and MSA Safety 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 MSA Safety Incorporated are associated (or correlated) with Halma Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Halma plc has no effect on the direction of MSA Safety i.e., MSA Safety and Halma Plc go up and down completely randomly.
Pair Corralation between MSA Safety and Halma Plc
Assuming the 90 days horizon MSA Safety is expected to generate 1.5 times less return on investment than Halma Plc. But when comparing it to its historical volatility, MSA Safety Incorporated is 1.23 times less risky than Halma Plc. It trades about 0.04 of its potential returns per unit of risk. Halma plc is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,325 in Halma plc on September 28, 2024 and sell it today you would earn a total of 963.00 from holding Halma plc or generate 41.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MSA Safety Incorporated vs. Halma plc
Performance |
| Timeline |
| MSA Safety |
| Halma plc |
MSA Safety and Halma Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MSA Safety and Halma Plc
The main advantage of trading using opposite MSA Safety and Halma Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MSA Safety position performs unexpectedly, Halma 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 Halma Plc will offset losses from the drop in Halma Plc's long position.| MSA Safety vs. ABB PAR AB | MSA Safety vs. ASSA ABLOY AB | MSA Safety vs. SECOM LTD | MSA Safety vs. Halma plc |
| Halma Plc vs. ABB PAR AB | Halma Plc vs. ASSA ABLOY AB | Halma Plc vs. SECOM LTD | Halma Plc 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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