Correlation Between Allegion PLC and Plymouth Rock

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

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

Diversification Opportunities for Allegion PLC and Plymouth Rock

0.81

Correlation Coefficient

Allegion PLC  Plymouth Rock

Very poor diversification

The 3 months correlation between Allegion and Plymouth is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Allegion PLC and Plymouth Rock Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plymouth Rock Techno 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 Plymouth Rock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plymouth Rock Techno has no effect on the direction of Allegion PLC i.e., Allegion PLC and Plymouth Rock go up and down completely randomly.

Pair Corralation between Allegion PLC and Plymouth Rock

If you would invest  4.00  in Plymouth Rock Technologies on September 23, 2024 and sell it today you would earn a total of  0.00  from holding Plymouth Rock Technologies or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	2.33%
Values	Daily Returns

Allegion PLC  vs.  Plymouth Rock Technologies

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.

Plymouth Rock Techno

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Allegion PLC and Plymouth Rock

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

The idea behind Allegion PLC and Plymouth Rock Technologies 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.