Correlation Between AB SKF and Stanley Black
Can any of the company-specific risk be diversified away by investing in both AB SKF 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 AB SKF and Stanley Black into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AB SKF and Stanley Black Decker, you can compare the effects of market volatilities on AB SKF 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 AB SKF with a short position of Stanley Black. Check out your portfolio center. Please also check ongoing floating volatility patterns of AB SKF and Stanley Black.
Diversification Opportunities for AB SKF and Stanley Black
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SKFRY and Stanley is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding AB SKF 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 AB SKF 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 AB SKF 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 AB SKF i.e., AB SKF and Stanley Black go up and down completely randomly.
Pair Corralation between AB SKF and Stanley Black
Assuming the 90 days horizon AB SKF is expected to generate 0.99 times more return on investment than Stanley Black. However, AB SKF is 1.01 times less risky than Stanley Black. It trades about -0.01 of its potential returns per unit of risk. Stanley Black Decker is currently generating about -0.25 per unit of risk. If you would invest 1,914 in AB SKF on August 27, 2024 and sell it today you would lose (24.00) from holding AB SKF or give up 1.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AB SKF vs. Stanley Black Decker
Performance |
| Timeline |
| AB SKF |
| Stanley Black Decker |
AB SKF and Stanley Black Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AB SKF and Stanley Black
The main advantage of trading using opposite AB SKF and Stanley Black positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AB SKF 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.| AB SKF vs. Element Solutions | AB SKF vs. Orion Engineered Carbons | AB SKF vs. Minerals Technologies | AB SKF vs. Ingevity Corp |
| Stanley Black vs. Toro Co | Stanley Black vs. Timken Company | Stanley Black vs. Lincoln Electric Holdings | Stanley Black vs. Kennametal |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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