Correlation Between Allegion PLC and Norra Metals

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

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

Diversification Opportunities for Allegion PLC and Norra Metals

0.0

Correlation Coefficient

Allegion PLC  Norra Metals

Pay attention - limited upside

The 3 months correlation between Allegion and Norra is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Allegion PLC and Norra Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norra Metals Corp 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 Norra Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norra Metals Corp has no effect on the direction of Allegion PLC i.e., Allegion PLC and Norra Metals go up and down completely randomly.

Pair Corralation between Allegion PLC and Norra Metals

Given the investment horizon of 90 days Allegion PLC is expected to generate 113.12 times less return on investment than Norra Metals. But when comparing it to its historical volatility, Allegion PLC is 52.11 times less risky than Norra Metals. It trades about 0.03 of its potential returns per unit of risk. Norra Metals Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1.51  in Norra Metals Corp on October 10, 2024 and sell it today you would lose (0.51) from holding Norra Metals Corp or give up 33.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Allegion PLC  vs.  Norra Metals Corp

Allegion PLC

Risk-Adjusted Performance

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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 weak performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Norra Metals Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Norra Metals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, Norra Metals 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 Norra Metals

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

The idea behind Allegion PLC and Norra Metals Corp 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.