Correlation Between Snap On and Makita Corp
Can any of the company-specific risk be diversified away by investing in both Snap On and Makita Corp 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 Makita Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap On and Makita Corp, you can compare the effects of market volatilities on Snap On and Makita Corp 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 Makita Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap On and Makita Corp.
Diversification Opportunities for Snap On and Makita Corp
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Snap and Makita is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Snap On and Makita Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Makita Corp 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 Makita Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Makita Corp has no effect on the direction of Snap On i.e., Snap On and Makita Corp go up and down completely randomly.
Pair Corralation between Snap On and Makita Corp
If you would invest 28,238 in Snap On on August 28, 2024 and sell it today you would earn a total of 8,826 from holding Snap On or generate 31.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 0.48% |
| Values | Daily Returns |
Snap On vs. Makita Corp
Performance |
| Timeline |
| Snap On |
| Makita Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Snap On and Makita Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap On and Makita Corp
The main advantage of trading using opposite Snap On and Makita Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap On position performs unexpectedly, Makita Corp 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 Makita Corp will offset losses from the drop in Makita Corp's long position.| Snap On vs. Lincoln Electric Holdings | Snap On vs. Timken Company | Snap On vs. Kennametal | Snap On vs. Toro Co |
| Makita Corp vs. Snap On | Makita Corp vs. Stanley Black Decker | Makita Corp vs. Eastern Co | Makita Corp vs. Hillman Solutions Corp |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |