Correlation Between Nauticus Robotics and ALLEGION

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

By analyzing existing cross correlation between Nauticus Robotics and ALLEGION HLDG INC, you can compare the effects of market volatilities on Nauticus Robotics and ALLEGION 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 Nauticus Robotics with a short position of ALLEGION. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nauticus Robotics and ALLEGION.

Diversification Opportunities for Nauticus Robotics and ALLEGION

-0.31

Correlation Coefficient

Nauticus Robotics  ALLEGION

Very good diversification

The 3 months correlation between Nauticus and ALLEGION is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Nauticus Robotics and ALLEGION HLDG INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALLEGION HLDG INC and Nauticus Robotics 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 Nauticus Robotics are associated (or correlated) with ALLEGION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALLEGION HLDG INC has no effect on the direction of Nauticus Robotics i.e., Nauticus Robotics and ALLEGION go up and down completely randomly.

Pair Corralation between Nauticus Robotics and ALLEGION

Assuming the 90 days horizon Nauticus Robotics is expected to generate 28.31 times more return on investment than ALLEGION. However, Nauticus Robotics is 28.31 times more volatile than ALLEGION HLDG INC. It trades about 0.09 of its potential returns per unit of risk. ALLEGION HLDG INC is currently generating about -0.12 per unit of risk. If you would invest  1.48  in Nauticus Robotics on September 27, 2024 and sell it today you would earn a total of  0.49  from holding Nauticus Robotics or generate 33.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	91.94%
Values	Daily Returns

Nauticus Robotics  vs.  ALLEGION HLDG INC

Nauticus Robotics

Risk-Adjusted Performance

7 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nauticus Robotics are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Nauticus Robotics showed solid returns over the last few months and may actually be approaching a breakup point.

ALLEGION HLDG INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ALLEGION HLDG INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, ALLEGION is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nauticus Robotics and ALLEGION

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

The idea behind Nauticus Robotics and ALLEGION HLDG INC 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.