Correlation Between Allegion PLC and Entegris

Can any of the company-specific risk be diversified away by investing in both Allegion PLC and Entegris 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 Allegion PLC and Entegris into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Allegion PLC and Entegris, you can compare the effects of market volatilities on Allegion PLC and Entegris 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 Allegion PLC with a short position of Entegris. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allegion PLC and Entegris.

Diversification Opportunities for Allegion PLC and Entegris

0.44

Correlation Coefficient

Allegion PLC  Entegris

Very weak diversification

The 3 months correlation between Allegion and Entegris is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Allegion PLC and Entegris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entegris and Allegion PLC 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 Allegion PLC are associated (or correlated) with Entegris. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entegris has no effect on the direction of Allegion PLC i.e., Allegion PLC and Entegris go up and down completely randomly.

Pair Corralation between Allegion PLC and Entegris

Given the investment horizon of 90 days Allegion PLC is expected to under-perform the Entegris. But the stock apears to be less risky and, when comparing its historical volatility, Allegion PLC is 1.4 times less risky than Entegris. The stock trades about -0.01 of its potential returns per unit of risk. The Entegris is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  10,223  in Entegris on October 26, 2024 and sell it today you would earn a total of  303.00  from holding Entegris or generate 2.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Allegion PLC  vs.  Entegris

Allegion PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Allegion PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's essential indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Entegris

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Entegris has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Entegris is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Allegion PLC and Entegris

The main advantage of trading using opposite Allegion PLC and Entegris positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allegion PLC position performs unexpectedly, Entegris 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 Entegris will offset losses from the drop in Entegris' long position.

The idea behind Allegion PLC and Entegris 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.

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.