Correlation Between Bowhead Specialty and Snap On
Can any of the company-specific risk be diversified away by investing in both Bowhead Specialty and Snap On 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 Bowhead Specialty and Snap On into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bowhead Specialty Holdings and Snap On, you can compare the effects of market volatilities on Bowhead Specialty and Snap On 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 Bowhead Specialty with a short position of Snap On. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bowhead Specialty and Snap On.
Diversification Opportunities for Bowhead Specialty and Snap On
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bowhead and Snap is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Bowhead Specialty Holdings and Snap On in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Snap On and Bowhead Specialty 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 Bowhead Specialty Holdings are associated (or correlated) with Snap On. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Snap On has no effect on the direction of Bowhead Specialty i.e., Bowhead Specialty and Snap On go up and down completely randomly.
Pair Corralation between Bowhead Specialty and Snap On
Considering the 90-day investment horizon Bowhead Specialty Holdings is expected to under-perform the Snap On. In addition to that, Bowhead Specialty is 1.96 times more volatile than Snap On. It trades about -0.35 of its total potential returns per unit of risk. Snap On is currently generating about -0.29 per unit of volatility. If you would invest 35,583 in Snap On on October 12, 2024 and sell it today you would lose (1,901) from holding Snap On or give up 5.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bowhead Specialty Holdings vs. Snap On
Performance |
| Timeline |
| Bowhead Specialty |
| Snap On |
Bowhead Specialty and Snap On Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bowhead Specialty and Snap On
The main advantage of trading using opposite Bowhead Specialty and Snap On positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bowhead Specialty position performs unexpectedly, Snap On 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 Snap On will offset losses from the drop in Snap On's long position.| Bowhead Specialty vs. National CineMedia | Bowhead Specialty vs. Weibo Corp | Bowhead Specialty vs. Imax Corp | Bowhead Specialty vs. Constellation Brands Class |
| Snap On vs. Lincoln Electric Holdings | Snap On vs. Timken Company | Snap On vs. Kennametal | Snap On vs. Toro Co |
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 CEOs Directory module to screen CEOs from public companies around the world.
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