Correlation Between Microsoft and Snap On
Can any of the company-specific risk be diversified away by investing in both Microsoft 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 Microsoft and Snap On into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Snap on Incorporated, you can compare the effects of market volatilities on Microsoft 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 Microsoft with a short position of Snap On. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Snap On.
Diversification Opportunities for Microsoft and Snap On
Very weak diversification
The 3 months correlation between Microsoft and Snap is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Snap on Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Snap on and Microsoft 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 Microsoft 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 Microsoft i.e., Microsoft and Snap On go up and down completely randomly.
Pair Corralation between Microsoft and Snap On
Assuming the 90 days trading horizon Microsoft is expected to under-perform the Snap On. In addition to that, Microsoft is 1.94 times more volatile than Snap on Incorporated. It trades about -0.04 of its total potential returns per unit of risk. Snap on Incorporated is currently generating about 0.1 per unit of volatility. If you would invest 33,100 in Snap on Incorporated on November 2, 2024 and sell it today you would earn a total of 750.00 from holding Snap on Incorporated or generate 2.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Snap on Incorporated
Performance |
| Timeline |
| Microsoft |
| Snap on |
Microsoft and Snap On Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Snap On
The main advantage of trading using opposite Microsoft and Snap On positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft 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.| Microsoft vs. The Yokohama Rubber | Microsoft vs. Vulcan Materials | Microsoft vs. Heidelberg Materials AG | Microsoft vs. Carsales |
| Snap On vs. Superior Plus Corp | Snap On vs. Origin Agritech | Snap On vs. Identiv | Snap On vs. INTUITIVE SURGICAL |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |