Correlation Between Mistras and Allegion PLC

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

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

Diversification Opportunities for Mistras and Allegion PLC

-0.37

Correlation Coefficient

Mistras  Allegion PLC

Very good diversification

The 3 months correlation between Mistras and Allegion is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Mistras Group and Allegion PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegion PLC and Mistras 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 Mistras 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 Mistras i.e., Mistras and Allegion PLC go up and down completely randomly.

Pair Corralation between Mistras and Allegion PLC

Allowing for the 90-day total investment horizon Mistras Group is expected to generate 1.1 times more return on investment than Allegion PLC. However, Mistras is 1.1 times more volatile than Allegion PLC. It trades about 0.07 of its potential returns per unit of risk. Allegion PLC is currently generating about -0.1 per unit of risk. If you would invest  928.00  in Mistras Group on November 27, 2024 and sell it today you would earn a total of  56.00  from holding Mistras Group or generate 6.03% return on investment over 90 days.

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

Mistras Group  vs.  Allegion PLC

Mistras Group

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mistras Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent technical and fundamental indicators, Mistras may actually be approaching a critical reversion point that can send shares even higher in March 2025.

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 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 Mistras and Allegion PLC

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

Check out your portfolio center.

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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.