Correlation Between Contango ORE and Allegion PLC

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

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

Diversification Opportunities for Contango ORE and Allegion PLC

0.45

Correlation Coefficient

Contango ORE  Allegion PLC

Very weak diversification

The 3 months correlation between Contango and Allegion is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Contango ORE and Allegion PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegion PLC and Contango ORE 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 Contango ORE are associated (or correlated) with Allegion PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allegion PLC has no effect on the direction of Contango ORE i.e., Contango ORE and Allegion PLC go up and down completely randomly.

Pair Corralation between Contango ORE and Allegion PLC

Given the investment horizon of 90 days Contango ORE is expected to generate 3.14 times more return on investment than Allegion PLC. However, Contango ORE is 3.14 times more volatile than Allegion PLC. It trades about 0.15 of its potential returns per unit of risk. Allegion PLC is currently generating about 0.13 per unit of risk. If you would invest  1,466  in Contango ORE on April 24, 2025 and sell it today you would earn a total of  573.50  from holding Contango ORE or generate 39.12% return on investment over 90 days.

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

Contango ORE  vs.  Allegion PLC

Contango ORE

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Contango ORE are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent technical and fundamental indicators, Contango ORE displayed solid returns over the last few months and may actually be approaching a breakup point.

Allegion PLC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Allegion PLC are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak essential indicators, Allegion PLC may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Contango ORE and Allegion PLC

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

The idea behind Contango ORE and Allegion PLC 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..