Correlation Between MSA Safety and Securitas
Can any of the company-specific risk be diversified away by investing in both MSA Safety and Securitas 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 Securitas 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 Securitas AB, you can compare the effects of market volatilities on MSA Safety and Securitas 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 Securitas. Check out your portfolio center. Please also check ongoing floating volatility patterns of MSA Safety and Securitas.
Diversification Opportunities for MSA Safety and Securitas
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MSA and Securitas is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding MSA Safety Incorporated and Securitas AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Securitas AB 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 Securitas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Securitas AB has no effect on the direction of MSA Safety i.e., MSA Safety and Securitas go up and down completely randomly.
Pair Corralation between MSA Safety and Securitas
Assuming the 90 days horizon MSA Safety Incorporated is expected to under-perform the Securitas. In addition to that, MSA Safety is 1.59 times more volatile than Securitas AB. It trades about -0.36 of its total potential returns per unit of risk. Securitas AB is currently generating about -0.3 per unit of volatility. If you would invest 1,206 in Securitas AB on October 16, 2024 and sell it today you would lose (50.00) from holding Securitas AB or give up 4.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MSA Safety Incorporated vs. Securitas AB
Performance |
| Timeline |
| MSA Safety |
| Securitas AB |
MSA Safety and Securitas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MSA Safety and Securitas
The main advantage of trading using opposite MSA Safety and Securitas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MSA Safety position performs unexpectedly, Securitas 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 Securitas will offset losses from the drop in Securitas' long position.| MSA Safety vs. Take Two Interactive Software | MSA Safety vs. VITEC SOFTWARE GROUP | MSA Safety vs. Cars Inc | MSA Safety vs. Guangdong Investment Limited |
| Securitas vs. ASSA ABLOY AB | Securitas vs. Halma plc | Securitas vs. Allegion plc | Securitas vs. Superior Plus Corp |
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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