Correlation Between Risk George and MSA Safety

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

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

Diversification Opportunities for Risk George and MSA Safety

0.05

Correlation Coefficient

Risk George  MSA Safety

Significant diversification

The 3 months correlation between Risk and MSA is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Risk George Inds and MSA Safety in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MSA Safety and Risk George 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 Risk George Inds are associated (or correlated) with MSA Safety. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MSA Safety has no effect on the direction of Risk George i.e., Risk George and MSA Safety go up and down completely randomly.

Pair Corralation between Risk George and MSA Safety

Assuming the 90 days horizon Risk George Inds is expected to generate 3.81 times more return on investment than MSA Safety. However, Risk George is 3.81 times more volatile than MSA Safety. It trades about 0.05 of its potential returns per unit of risk. MSA Safety is currently generating about 0.04 per unit of risk. If you would invest  1,065  in Risk George Inds on September 26, 2024 and sell it today you would earn a total of  635.00  from holding Risk George Inds or generate 59.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.57%
Values	Daily Returns

Risk George Inds  vs.  MSA Safety

Risk George Inds

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Risk George Inds are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Risk George sustained solid returns over the last few months and may actually be approaching a breakup point.

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 latest unsteady performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Risk George and MSA Safety

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

The idea behind Risk George Inds and MSA Safety 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.