Correlation Between Snap On and Energy
Can any of the company-specific risk be diversified away by investing in both Snap On and Energy 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 Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap On and Energy and Water, you can compare the effects of market volatilities on Snap On and Energy 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 Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap On and Energy.
Diversification Opportunities for Snap On and Energy
Pay attention - limited upside
The 3 months correlation between Snap and Energy is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Snap On and Energy and Water in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy and Water 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 Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy and Water has no effect on the direction of Snap On i.e., Snap On and Energy go up and down completely randomly.
Pair Corralation between Snap On and Energy
Considering the 90-day investment horizon Snap On is expected to generate 0.1 times more return on investment than Energy. However, Snap On is 9.92 times less risky than Energy. It trades about 0.34 of its potential returns per unit of risk. Energy and Water is currently generating about -0.12 per unit of risk. If you would invest 33,149 in Snap On on August 30, 2024 and sell it today you would earn a total of 3,774 from holding Snap On or generate 11.38% 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. Energy and Water
Performance |
| Timeline |
| Snap On |
| Energy and Water |
Snap On and Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap On and Energy
The main advantage of trading using opposite Snap On and Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap On position performs unexpectedly, Energy 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 Energy will offset losses from the drop in Energy's long position.| Snap On vs. Lincoln Electric Holdings | Snap On vs. Timken Company | Snap On vs. Kennametal | Snap On vs. Toro Co |
| Energy vs. Vow ASA | Energy vs. Eestech | Energy vs. One World Universe | Energy vs. Bion Environmental Technologies |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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