Correlation Between Stanley Black and Baker Steel
Can any of the company-specific risk be diversified away by investing in both Stanley Black and Baker Steel 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 Stanley Black and Baker Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stanley Black Decker and Baker Steel Resources, you can compare the effects of market volatilities on Stanley Black and Baker Steel 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 Stanley Black with a short position of Baker Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stanley Black and Baker Steel.
Diversification Opportunities for Stanley Black and Baker Steel
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Stanley and Baker is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Stanley Black Decker and Baker Steel Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baker Steel Resources and Stanley Black 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 Stanley Black Decker are associated (or correlated) with Baker Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baker Steel Resources has no effect on the direction of Stanley Black i.e., Stanley Black and Baker Steel go up and down completely randomly.
Pair Corralation between Stanley Black and Baker Steel
Assuming the 90 days trading horizon Stanley Black Decker is expected to under-perform the Baker Steel. But the stock apears to be less risky and, when comparing its historical volatility, Stanley Black Decker is 1.08 times less risky than Baker Steel. The stock trades about -0.07 of its potential returns per unit of risk. The Baker Steel Resources is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest 4,750 in Baker Steel Resources on September 2, 2024 and sell it today you would earn a total of 1,050 from holding Baker Steel Resources or generate 22.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Stanley Black Decker vs. Baker Steel Resources
Performance |
| Timeline |
| Stanley Black Decker |
| Baker Steel Resources |
Stanley Black and Baker Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stanley Black and Baker Steel
The main advantage of trading using opposite Stanley Black and Baker Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stanley Black position performs unexpectedly, Baker Steel 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 Baker Steel will offset losses from the drop in Baker Steel's long position.| Stanley Black vs. Baker Steel Resources | Stanley Black vs. Endeavour Mining Corp | Stanley Black vs. Eastinco Mining Exploration | Stanley Black vs. Hochschild Mining plc |
| Baker Steel vs. Toyota Motor Corp | Baker Steel vs. SoftBank Group Corp | Baker Steel vs. OTP Bank Nyrt | Baker Steel vs. Las Vegas Sands |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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