Correlation Between MSA Safety and Loomis AB
Can any of the company-specific risk be diversified away by investing in both MSA Safety and Loomis AB 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 Loomis AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MSA Safety and Loomis AB, you can compare the effects of market volatilities on MSA Safety and Loomis AB 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 Loomis AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of MSA Safety and Loomis AB.
Diversification Opportunities for MSA Safety and Loomis AB
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between MSA and Loomis is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding MSA Safety and Loomis AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loomis 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 are associated (or correlated) with Loomis AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loomis AB has no effect on the direction of MSA Safety i.e., MSA Safety and Loomis AB go up and down completely randomly.
Pair Corralation between MSA Safety and Loomis AB
Considering the 90-day investment horizon MSA Safety is expected to generate 5.72 times less return on investment than Loomis AB. But when comparing it to its historical volatility, MSA Safety is 2.01 times less risky than Loomis AB. It trades about 0.02 of its potential returns per unit of risk. Loomis AB is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,526 in Loomis AB on September 14, 2024 and sell it today you would earn a total of 672.00 from holding Loomis AB or generate 26.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 63.45% |
| Values | Daily Returns |
MSA Safety vs. Loomis AB
Performance |
| Timeline |
| MSA Safety |
| Loomis AB |
MSA Safety and Loomis AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MSA Safety and Loomis AB
The main advantage of trading using opposite MSA Safety and Loomis AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MSA Safety position performs unexpectedly, Loomis AB 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 Loomis AB will offset losses from the drop in Loomis AB's long position.| MSA Safety vs. Allegion PLC | MSA Safety vs. Resideo Technologies | MSA Safety vs. NL Industries | MSA Safety vs. Brady |
| Loomis AB vs. Allegion PLC | Loomis AB vs. MSA Safety | Loomis AB vs. Resideo Technologies | Loomis AB vs. NL Industries |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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