Correlation Between Brinks and ASSA ABLOY
Can any of the company-specific risk be diversified away by investing in both Brinks and ASSA ABLOY 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 Brinks and ASSA ABLOY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Brinks and ASSA ABLOY AB, you can compare the effects of market volatilities on Brinks and ASSA ABLOY 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 Brinks with a short position of ASSA ABLOY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brinks and ASSA ABLOY.
Diversification Opportunities for Brinks and ASSA ABLOY
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Brinks and ASSA is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding The Brinks and ASSA ABLOY AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASSA ABLOY AB and Brinks 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 The Brinks are associated (or correlated) with ASSA ABLOY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASSA ABLOY AB has no effect on the direction of Brinks i.e., Brinks and ASSA ABLOY go up and down completely randomly.
Pair Corralation between Brinks and ASSA ABLOY
Assuming the 90 days horizon Brinks is expected to generate 1.34 times less return on investment than ASSA ABLOY. In addition to that, Brinks is 1.22 times more volatile than ASSA ABLOY AB. It trades about 0.06 of its total potential returns per unit of risk. ASSA ABLOY AB is currently generating about 0.1 per unit of volatility. If you would invest 1,332 in ASSA ABLOY AB on September 28, 2024 and sell it today you would earn a total of 1,513 from holding ASSA ABLOY AB or generate 113.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Brinks vs. ASSA ABLOY AB
Performance |
| Timeline |
| Brinks |
| ASSA ABLOY AB |
Brinks and ASSA ABLOY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brinks and ASSA ABLOY
The main advantage of trading using opposite Brinks and ASSA ABLOY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brinks position performs unexpectedly, ASSA ABLOY 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 ASSA ABLOY will offset losses from the drop in ASSA ABLOY's long position.The idea behind The Brinks and ASSA ABLOY AB pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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