Correlation Between Geo and Allegion PLC

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

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

Diversification Opportunities for Geo and Allegion PLC

-0.63

Correlation Coefficient

Geo  Allegion PLC

Excellent diversification

The 3 months correlation between Geo and Allegion is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Geo Group and Allegion PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegion PLC and Geo 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 Geo Group 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 Geo i.e., Geo and Allegion PLC go up and down completely randomly.

Pair Corralation between Geo and Allegion PLC

Considering the 90-day investment horizon Geo Group is expected to generate 2.72 times more return on investment than Allegion PLC. However, Geo is 2.72 times more volatile than Allegion PLC. It trades about 0.12 of its potential returns per unit of risk. Allegion PLC is currently generating about 0.07 per unit of risk. If you would invest  860.00  in Geo Group on September 26, 2024 and sell it today you would earn a total of  1,941  from holding Geo Group or generate 225.7% return on investment over 90 days.

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

Geo Group  vs.  Allegion PLC

Geo Group

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Geo Group are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady technical and fundamental indicators, Geo displayed solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Geo and Allegion PLC

The main advantage of trading using opposite Geo and Allegion PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Geo 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 Geo Group 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.

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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.