Correlation Between Snap On and Fortum Oyj
Can any of the company-specific risk be diversified away by investing in both Snap On and Fortum Oyj 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 Fortum Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap On and Fortum Oyj ADR, you can compare the effects of market volatilities on Snap On and Fortum Oyj 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 Fortum Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap On and Fortum Oyj.
Diversification Opportunities for Snap On and Fortum Oyj
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Snap and Fortum is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Snap On and Fortum Oyj ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortum Oyj ADR 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 Fortum Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortum Oyj ADR has no effect on the direction of Snap On i.e., Snap On and Fortum Oyj go up and down completely randomly.
Pair Corralation between Snap On and Fortum Oyj
Considering the 90-day investment horizon Snap On is expected to generate 0.74 times more return on investment than Fortum Oyj. However, Snap On is 1.35 times less risky than Fortum Oyj. It trades about 0.09 of its potential returns per unit of risk. Fortum Oyj ADR is currently generating about 0.04 per unit of risk. If you would invest 26,549 in Snap On on August 24, 2024 and sell it today you would earn a total of 9,591 from holding Snap On or generate 36.13% 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. Fortum Oyj ADR
Performance |
| Timeline |
| Snap On |
| Fortum Oyj ADR |
Snap On and Fortum Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap On and Fortum Oyj
The main advantage of trading using opposite Snap On and Fortum Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap On position performs unexpectedly, Fortum Oyj 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 Fortum Oyj will offset losses from the drop in Fortum Oyj's long position.| Snap On vs. Lincoln Electric Holdings | Snap On vs. Timken Company | Snap On vs. Kennametal | Snap On vs. Toro Co |
| Fortum Oyj vs. Constellation Energy Corp | Fortum Oyj vs. Astra Energy | Fortum Oyj vs. Powertap Hydrogen Capital | Fortum Oyj vs. Brenmiller Energy Ltd |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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