Correlation Between Newell Brands and Snap On
Can any of the company-specific risk be diversified away by investing in both Newell Brands 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 Newell Brands and Snap On into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Newell Brands and Snap On, you can compare the effects of market volatilities on Newell Brands 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 Newell Brands with a short position of Snap On. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newell Brands and Snap On.
Diversification Opportunities for Newell Brands and Snap On
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Newell and Snap is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Newell Brands and Snap On in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Snap On and Newell Brands 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 Newell Brands 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 Newell Brands i.e., Newell Brands and Snap On go up and down completely randomly.
Pair Corralation between Newell Brands and Snap On
Considering the 90-day investment horizon Newell Brands is expected to generate 8.2 times less return on investment than Snap On. In addition to that, Newell Brands is 1.49 times more volatile than Snap On. It trades about 0.03 of its total potential returns per unit of risk. Snap On is currently generating about 0.38 per unit of volatility. If you would invest 33,060 in Snap On on August 27, 2024 and sell it today you would earn a total of 4,004 from holding Snap On or generate 12.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Newell Brands vs. Snap On
Performance |
| Timeline |
| Newell Brands |
| Snap On |
Newell Brands and Snap On Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Newell Brands and Snap On
The main advantage of trading using opposite Newell Brands and Snap On positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newell Brands 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.| Newell Brands vs. The Clorox | Newell Brands vs. Colgate Palmolive | Newell Brands vs. Procter Gamble | Newell Brands vs. Unilever PLC ADR |
| 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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