Correlation Between Allegion PLC and MSA Safety

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

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

Diversification Opportunities for Allegion PLC and MSA Safety

0.79

Correlation Coefficient

Allegion PLC  MSA Safety

Poor diversification

The 3 months correlation between Allegion and MSA is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Allegion PLC and MSA Safety in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MSA Safety 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 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 Allegion PLC i.e., Allegion PLC and MSA Safety go up and down completely randomly.

Pair Corralation between Allegion PLC and MSA Safety

Given the investment horizon of 90 days Allegion PLC is expected to generate 1.32 times more return on investment than MSA Safety. However, Allegion PLC is 1.32 times more volatile than MSA Safety. It trades about 0.18 of its potential returns per unit of risk. MSA Safety is currently generating about 0.18 per unit of risk. If you would invest  14,037  in Allegion PLC on May 5, 2025 and sell it today you would earn a total of  2,476  from holding Allegion PLC or generate 17.64% return on investment over 90 days.

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

Allegion PLC  vs.  MSA Safety

Allegion PLC

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Allegion PLC are ranked lower than 14 (%) 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.

MSA Safety

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MSA Safety are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, MSA Safety may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Allegion PLC and MSA Safety

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

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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.