Correlation Between Allegion PLC and 26442EAG5

Can any of the company-specific risk be diversified away by investing in both Allegion PLC and 26442EAG5 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 26442EAG5 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Allegion PLC and DUKE ENERGY OHIO, you can compare the effects of market volatilities on Allegion PLC and 26442EAG5 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 26442EAG5. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allegion PLC and 26442EAG5.

Diversification Opportunities for Allegion PLC and 26442EAG5

-0.1

Correlation Coefficient

Allegion PLC  26442EAG5

Good diversification

The 3 months correlation between Allegion and 26442EAG5 is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Allegion PLC and DUKE ENERGY OHIO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DUKE ENERGY OHIO 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 26442EAG5. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DUKE ENERGY OHIO has no effect on the direction of Allegion PLC i.e., Allegion PLC and 26442EAG5 go up and down completely randomly.

Pair Corralation between Allegion PLC and 26442EAG5

Given the investment horizon of 90 days Allegion PLC is expected to under-perform the 26442EAG5. In addition to that, Allegion PLC is 1.14 times more volatile than DUKE ENERGY OHIO. It trades about -0.01 of its total potential returns per unit of risk. DUKE ENERGY OHIO is currently generating about 0.16 per unit of volatility. If you would invest  7,976  in DUKE ENERGY OHIO on December 25, 2024 and sell it today you would earn a total of  772.00  from holding DUKE ENERGY OHIO or generate 9.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	72.88%
Values	Daily Returns

Allegion PLC  vs.  DUKE ENERGY OHIO

Allegion PLC

Risk-Adjusted Performance

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 rather sound essential indicators, Allegion PLC is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

DUKE ENERGY OHIO

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DUKE ENERGY OHIO are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, 26442EAG5 sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Allegion PLC and 26442EAG5

The main advantage of trading using opposite Allegion PLC and 26442EAG5 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allegion PLC position performs unexpectedly, 26442EAG5 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 26442EAG5 will offset losses from the drop in 26442EAG5's long position.

The idea behind Allegion PLC and DUKE ENERGY OHIO 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.