Correlation Between Snap On and Stanley Black
Can any of the company-specific risk be diversified away by investing in both Snap On and Stanley Black 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 Stanley Black 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 Stanley Black Decker, you can compare the effects of market volatilities on Snap On and Stanley Black 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 Stanley Black. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap On and Stanley Black.
Diversification Opportunities for Snap On and Stanley Black
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Snap and Stanley is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Snap on Incorporated and Stanley Black Decker in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stanley Black Decker 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 Stanley Black. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stanley Black Decker has no effect on the direction of Snap On i.e., Snap On and Stanley Black go up and down completely randomly.
Pair Corralation between Snap On and Stanley Black
Assuming the 90 days horizon Snap on Incorporated is expected to generate 0.71 times more return on investment than Stanley Black. However, Snap on Incorporated is 1.41 times less risky than Stanley Black. It trades about 0.09 of its potential returns per unit of risk. Stanley Black Decker is currently generating about 0.01 per unit of risk. If you would invest 25,460 in Snap on Incorporated on September 4, 2024 and sell it today you would earn a total of 9,420 from holding Snap on Incorporated or generate 37.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snap on Incorporated vs. Stanley Black Decker
Performance |
| Timeline |
| Snap on |
| Stanley Black Decker |
Snap On and Stanley Black Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap On and Stanley Black
The main advantage of trading using opposite Snap On and Stanley Black positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap On position performs unexpectedly, Stanley Black 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 Stanley Black will offset losses from the drop in Stanley Black's long position.| Snap On vs. Stanley Black Decker | Snap On vs. Toro Co | Snap On vs. Lincoln Electric Holdings | Snap On vs. AB SKF |
| Stanley Black vs. Snap on Incorporated | Stanley Black vs. Toro Co | Stanley Black vs. Lincoln Electric Holdings | Stanley Black vs. AB SKF |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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