Correlation Between MTU Aero and Stanley Black
Can any of the company-specific risk be diversified away by investing in both MTU Aero and Stanley Black 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 MTU Aero and Stanley Black into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MTU Aero Engines and Stanley Black Decker, you can compare the effects of market volatilities on MTU Aero and Stanley Black 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 MTU Aero with a short position of Stanley Black. Check out your portfolio center. Please also check ongoing floating volatility patterns of MTU Aero and Stanley Black.
Diversification Opportunities for MTU Aero and Stanley Black
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MTU and Stanley is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding MTU Aero Engines and Stanley Black Decker in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stanley Black Decker and MTU Aero 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 MTU Aero Engines are associated (or correlated) with Stanley Black. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stanley Black Decker has no effect on the direction of MTU Aero i.e., MTU Aero and Stanley Black go up and down completely randomly.
Pair Corralation between MTU Aero and Stanley Black
Assuming the 90 days trading horizon MTU Aero is expected to generate 3.99 times less return on investment than Stanley Black. In addition to that, MTU Aero is 2.02 times more volatile than Stanley Black Decker. It trades about 0.05 of its total potential returns per unit of risk. Stanley Black Decker is currently generating about 0.4 per unit of volatility. If you would invest 7,794 in Stanley Black Decker on November 2, 2024 and sell it today you would earn a total of 680.00 from holding Stanley Black Decker or generate 8.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
MTU Aero Engines vs. Stanley Black Decker
Performance |
| Timeline |
| MTU Aero Engines |
| Stanley Black Decker |
MTU Aero and Stanley Black Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MTU Aero and Stanley Black
The main advantage of trading using opposite MTU Aero and Stanley Black positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MTU Aero position performs unexpectedly, Stanley Black 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 Stanley Black will offset losses from the drop in Stanley Black's long position.| MTU Aero vs. Raytheon Technologies Corp | MTU Aero vs. The Boeing | MTU Aero vs. Lockheed Martin | MTU Aero vs. Lockheed Martin |
| Stanley Black vs. Superior Plus Corp | Stanley Black vs. Origin Agritech | Stanley Black vs. Identiv | Stanley Black 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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