Correlation Between MSA Safety and Brady

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

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

Diversification Opportunities for MSA Safety and Brady

0.5

Correlation Coefficient

MSA Safety  Brady

Very weak diversification

The 3 months correlation between MSA and Brady is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding MSA Safety and Brady in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brady and MSA Safety 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 MSA Safety are associated (or correlated) with Brady. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brady has no effect on the direction of MSA Safety i.e., MSA Safety and Brady go up and down completely randomly.

Pair Corralation between MSA Safety and Brady

Considering the 90-day investment horizon MSA Safety is expected to generate 66.36 times less return on investment than Brady. In addition to that, MSA Safety is 1.02 times more volatile than Brady. It trades about 0.0 of its total potential returns per unit of risk. Brady is currently generating about 0.07 per unit of volatility. If you would invest  6,731  in Brady on September 1, 2024 and sell it today you would earn a total of  758.00  from holding Brady or generate 11.26% return on investment over 90 days.

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

MSA Safety  vs.  Brady

MSA Safety

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MSA Safety has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, MSA Safety is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Brady

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Brady are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Brady is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with MSA Safety and Brady

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

The idea behind MSA Safety and Brady 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.