Correlation Between Saia and Allegion PLC
Can any of the company-specific risk be diversified away by investing in both Saia 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 Saia and Allegion PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Saia Inc and Allegion PLC, you can compare the effects of market volatilities on Saia 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 Saia with a short position of Allegion PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Saia and Allegion PLC.
Diversification Opportunities for Saia and Allegion PLC
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Saia and Allegion is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Saia Inc and Allegion PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegion PLC and Saia 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 Saia Inc 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 Saia i.e., Saia and Allegion PLC go up and down completely randomly.
Pair Corralation between Saia and Allegion PLC
Given the investment horizon of 90 days Saia Inc is expected to under-perform the Allegion PLC. In addition to that, Saia is 2.04 times more volatile than Allegion PLC. It trades about -0.32 of its total potential returns per unit of risk. Allegion PLC is currently generating about -0.31 per unit of volatility. If you would invest 13,752 in Allegion PLC on October 16, 2024 and sell it today you would lose (926.00) from holding Allegion PLC or give up 6.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Saia Inc vs. Allegion PLC
Performance |
| Timeline |
| Saia Inc |
| Allegion PLC |
Saia and Allegion PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Saia and Allegion PLC
The main advantage of trading using opposite Saia and Allegion PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Saia 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.The idea behind Saia Inc and Allegion PLC 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.| 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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