Correlation Between Sandvik AB and Graco
Can any of the company-specific risk be diversified away by investing in both Sandvik AB and Graco 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 Sandvik AB and Graco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sandvik AB and Graco Inc, you can compare the effects of market volatilities on Sandvik AB and Graco 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 Sandvik AB with a short position of Graco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sandvik AB and Graco.
Diversification Opportunities for Sandvik AB and Graco
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sandvik and Graco is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Sandvik AB and Graco Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graco Inc and Sandvik AB 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 Sandvik AB are associated (or correlated) with Graco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graco Inc has no effect on the direction of Sandvik AB i.e., Sandvik AB and Graco go up and down completely randomly.
Pair Corralation between Sandvik AB and Graco
Assuming the 90 days horizon Sandvik AB is expected to generate 2.62 times less return on investment than Graco. In addition to that, Sandvik AB is 1.73 times more volatile than Graco Inc. It trades about 0.01 of its total potential returns per unit of risk. Graco Inc is currently generating about 0.05 per unit of volatility. If you would invest 6,719 in Graco Inc on August 26, 2024 and sell it today you would earn a total of 2,389 from holding Graco Inc or generate 35.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 66.6% |
| Values | Daily Returns |
Sandvik AB vs. Graco Inc
Performance |
| Timeline |
| Sandvik AB |
| Graco Inc |
Sandvik AB and Graco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sandvik AB and Graco
The main advantage of trading using opposite Sandvik AB and Graco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sandvik AB position performs unexpectedly, Graco 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 Graco will offset losses from the drop in Graco's long position.| Sandvik AB vs. Schneider Electric SA | Sandvik AB vs. KONE Oyj | Sandvik AB vs. Atlas Copco AB | Sandvik AB vs. Sandvik AB ADR |
| Graco vs. Aquagold International | Graco vs. Morningstar Unconstrained Allocation | Graco vs. High Yield Municipal Fund | Graco vs. Thrivent High Yield |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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