Correlation Between Snap On and Whitbread Plc
Can any of the company-specific risk be diversified away by investing in both Snap On and Whitbread Plc 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 Whitbread Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap On and Whitbread plc, you can compare the effects of market volatilities on Snap On and Whitbread Plc 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 Whitbread Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap On and Whitbread Plc.
Diversification Opportunities for Snap On and Whitbread Plc
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Snap and Whitbread is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Snap On and Whitbread plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whitbread 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 Whitbread Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whitbread plc has no effect on the direction of Snap On i.e., Snap On and Whitbread Plc go up and down completely randomly.
Pair Corralation between Snap On and Whitbread Plc
Considering the 90-day investment horizon Snap On is expected to generate 0.53 times more return on investment than Whitbread Plc. However, Snap On is 1.88 times less risky than Whitbread Plc. It trades about 0.09 of its potential returns per unit of risk. Whitbread plc is currently generating about -0.15 per unit of risk. If you would invest 33,060 in Snap On on October 26, 2024 and sell it today you would earn a total of 2,021 from holding Snap On or generate 6.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snap On vs. Whitbread plc
Performance |
| Timeline |
| Snap On |
| Whitbread plc |
Snap On and Whitbread Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap On and Whitbread Plc
The main advantage of trading using opposite Snap On and Whitbread Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap On position performs unexpectedly, Whitbread Plc 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 Whitbread Plc will offset losses from the drop in Whitbread Plc's long position.| Snap On vs. Lincoln Electric Holdings | Snap On vs. Timken Company | Snap On vs. Kennametal | Snap On vs. Toro Co |
| Whitbread Plc vs. Cheniere Energy Partners | Whitbread Plc vs. Vasta Platform | Whitbread Plc vs. Summit Midstream | Whitbread Plc vs. Kenon Holdings |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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