Correlation Between Stanley Black and AB SKF
Can any of the company-specific risk be diversified away by investing in both Stanley Black and AB SKF 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 Stanley Black and AB SKF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stanley Black Decker and AB SKF, you can compare the effects of market volatilities on Stanley Black and AB SKF 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 Stanley Black with a short position of AB SKF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stanley Black and AB SKF.
Diversification Opportunities for Stanley Black and AB SKF
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Stanley and SKFB is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Stanley Black Decker and AB SKF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB SKF and Stanley Black 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 Stanley Black Decker are associated (or correlated) with AB SKF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB SKF has no effect on the direction of Stanley Black i.e., Stanley Black and AB SKF go up and down completely randomly.
Pair Corralation between Stanley Black and AB SKF
Assuming the 90 days horizon Stanley Black Decker is expected to generate 1.07 times more return on investment than AB SKF. However, Stanley Black is 1.07 times more volatile than AB SKF. It trades about 0.2 of its potential returns per unit of risk. AB SKF is currently generating about 0.02 per unit of risk. If you would invest 7,718 in Stanley Black Decker on October 20, 2024 and sell it today you would earn a total of 436.00 from holding Stanley Black Decker or generate 5.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stanley Black Decker vs. AB SKF
Performance |
| Timeline |
| Stanley Black Decker |
| AB SKF |
Stanley Black and AB SKF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stanley Black and AB SKF
The main advantage of trading using opposite Stanley Black and AB SKF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stanley Black position performs unexpectedly, AB SKF 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 AB SKF will offset losses from the drop in AB SKF's long position.| Stanley Black vs. Techtronic Industries | Stanley Black vs. Snap on Incorporated | Stanley Black vs. Toro Co | Stanley Black vs. AB SKF |
| AB SKF vs. Techtronic Industries | AB SKF vs. Snap on Incorporated | AB SKF vs. Stanley Black Decker | AB SKF vs. Toro Co |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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