Correlation Between Snap On and Dr Martens
Can any of the company-specific risk be diversified away by investing in both Snap On and Dr Martens 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 Snap On and Dr Martens into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap On and Dr Martens plc, you can compare the effects of market volatilities on Snap On and Dr Martens 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 Snap On with a short position of Dr Martens. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap On and Dr Martens.
Diversification Opportunities for Snap On and Dr Martens
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Snap and DOCMF is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Snap On and Dr Martens plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dr Martens plc and Snap On 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 Snap On are associated (or correlated) with Dr Martens. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dr Martens plc has no effect on the direction of Snap On i.e., Snap On and Dr Martens go up and down completely randomly.
Pair Corralation between Snap On and Dr Martens
Considering the 90-day investment horizon Snap On is expected to generate 0.42 times more return on investment than Dr Martens. However, Snap On is 2.41 times less risky than Dr Martens. It trades about 0.38 of its potential returns per unit of risk. Dr Martens plc is currently generating about -0.04 per unit of risk. If you would invest 33,060 in Snap On on August 29, 2024 and sell it today you would earn a total of 4,075 from holding Snap On or generate 12.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snap On vs. Dr Martens plc
Performance |
| Timeline |
| Snap On |
| Dr Martens plc |
Snap On and Dr Martens Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap On and Dr Martens
The main advantage of trading using opposite Snap On and Dr Martens positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap On position performs unexpectedly, Dr Martens 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 Dr Martens will offset losses from the drop in Dr Martens' long position.| Snap On vs. Lincoln Electric Holdings | Snap On vs. Timken Company | Snap On vs. Kennametal | Snap On vs. Toro Co |
| Dr Martens vs. American Rebel Holdings | Dr Martens vs. American Rebel Holdings | Dr Martens vs. Crocs Inc | Dr Martens vs. On Holding |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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