Correlation Between Resideo Technologies and MSA Safety
Can any of the company-specific risk be diversified away by investing in both Resideo Technologies 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 Resideo Technologies and MSA Safety into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Resideo Technologies and MSA Safety, you can compare the effects of market volatilities on Resideo Technologies 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 Resideo Technologies with a short position of MSA Safety. Check out your portfolio center. Please also check ongoing floating volatility patterns of Resideo Technologies and MSA Safety.
Diversification Opportunities for Resideo Technologies and MSA Safety
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Resideo and MSA is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Resideo Technologies and MSA Safety in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MSA Safety and Resideo Technologies 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 Resideo Technologies 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 Resideo Technologies i.e., Resideo Technologies and MSA Safety go up and down completely randomly.
Pair Corralation between Resideo Technologies and MSA Safety
Given the investment horizon of 90 days Resideo Technologies is expected to generate 3.25 times more return on investment than MSA Safety. However, Resideo Technologies is 3.25 times more volatile than MSA Safety. It trades about 0.08 of its potential returns per unit of risk. MSA Safety is currently generating about 0.22 per unit of risk. If you would invest 1,708 in Resideo Technologies on January 26, 2024 and sell it today you would earn a total of 273.00 from holding Resideo Technologies or generate 15.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Resideo Technologies vs. MSA Safety
Performance |
| Timeline |
| Resideo Technologies |
| MSA Safety |
Resideo Technologies and MSA Safety Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Resideo Technologies and MSA Safety
The main advantage of trading using opposite Resideo Technologies and MSA Safety positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Resideo Technologies 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.| Resideo Technologies vs. Allegion PLC | Resideo Technologies vs. MSA Safety | Resideo Technologies vs. NL Industries | Resideo Technologies vs. Brady |
| MSA Safety vs. Allegion PLC | MSA Safety vs. Resideo Technologies | MSA Safety vs. NL Industries | MSA Safety vs. Brady |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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