Correlation Between Allegion PLC and AXIS Capital

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

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

Diversification Opportunities for Allegion PLC and AXIS Capital

-0.34

Correlation Coefficient

Allegion PLC  AXIS Capital

Very good diversification

The 3 months correlation between Allegion and AXIS is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Allegion PLC and AXIS Capital Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXIS Capital Holdings and Allegion PLC 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 Allegion PLC are associated (or correlated) with AXIS Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXIS Capital Holdings has no effect on the direction of Allegion PLC i.e., Allegion PLC and AXIS Capital go up and down completely randomly.

Pair Corralation between Allegion PLC and AXIS Capital

Given the investment horizon of 90 days Allegion PLC is expected to generate 1.02 times more return on investment than AXIS Capital. However, Allegion PLC is 1.02 times more volatile than AXIS Capital Holdings. It trades about 0.19 of its potential returns per unit of risk. AXIS Capital Holdings is currently generating about 0.01 per unit of risk. If you would invest  13,818  in Allegion PLC on May 1, 2025 and sell it today you would earn a total of  2,593  from holding Allegion PLC or generate 18.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Allegion PLC  vs.  AXIS Capital Holdings

Allegion PLC

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Allegion PLC are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak essential indicators, Allegion PLC exhibited solid returns over the last few months and may actually be approaching a breakup point.

AXIS Capital Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days AXIS Capital Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, AXIS Capital is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Allegion PLC and AXIS Capital

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

The idea behind Allegion PLC and AXIS Capital Holdings 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.