Correlation Between Snap On and Air Transport
Can any of the company-specific risk be diversified away by investing in both Snap On and Air Transport 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 Air Transport into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap on Incorporated and Air Transport Services, you can compare the effects of market volatilities on Snap On and Air Transport 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 Air Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap On and Air Transport.
Diversification Opportunities for Snap On and Air Transport
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Snap and Air is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Snap on Incorporated and Air Transport Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Transport Services 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 Incorporated are associated (or correlated) with Air Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Transport Services has no effect on the direction of Snap On i.e., Snap On and Air Transport go up and down completely randomly.
Pair Corralation between Snap On and Air Transport
Assuming the 90 days horizon Snap on Incorporated is expected to generate 1.48 times more return on investment than Air Transport. However, Snap On is 1.48 times more volatile than Air Transport Services. It trades about 0.39 of its potential returns per unit of risk. Air Transport Services is currently generating about 0.23 per unit of risk. If you would invest 30,106 in Snap on Incorporated on September 5, 2024 and sell it today you would earn a total of 4,734 from holding Snap on Incorporated or generate 15.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Snap on Incorporated vs. Air Transport Services
Performance |
| Timeline |
| Snap on |
| Air Transport Services |
Snap On and Air Transport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap On and Air Transport
The main advantage of trading using opposite Snap On and Air Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap On position performs unexpectedly, Air Transport 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 Air Transport will offset losses from the drop in Air Transport's long position.| Snap On vs. Air Transport Services | Snap On vs. Texas Roadhouse | Snap On vs. Lion One Metals | Snap On vs. Gaztransport Technigaz SA |
| Air Transport vs. Airports of Thailand | Air Transport vs. Airports of Thailand | Air Transport vs. Aena SME SA | Air Transport vs. AENA SME UNSPADR110 |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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