Correlation Between Stanley Black and Snap On
Can any of the company-specific risk be diversified away by investing in both Stanley Black and Snap On 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 Snap On 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 Snap on Incorporated, you can compare the effects of market volatilities on Stanley Black and Snap On 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 Snap On. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stanley Black and Snap On.
Diversification Opportunities for Stanley Black and Snap On
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Stanley and Snap is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Stanley Black Decker and Snap on Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Snap on 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 Snap On. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Snap on has no effect on the direction of Stanley Black i.e., Stanley Black and Snap On go up and down completely randomly.
Pair Corralation between Stanley Black and Snap On
Assuming the 90 days horizon Stanley Black Decker is expected to under-perform the Snap On. But the stock apears to be less risky and, when comparing its historical volatility, Stanley Black Decker is 1.03 times less risky than Snap On. The stock trades about -0.03 of its potential returns per unit of risk. The Snap on Incorporated is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 25,029 in Snap on Incorporated on September 4, 2024 and sell it today you would earn a total of 9,851 from holding Snap on Incorporated or generate 39.36% 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. Snap on Incorporated
Performance |
| Timeline |
| Stanley Black Decker |
| Snap on |
Stanley Black and Snap On Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stanley Black and Snap On
The main advantage of trading using opposite Stanley Black and Snap On positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stanley Black position performs unexpectedly, Snap On 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 Snap On will offset losses from the drop in Snap On's long position.| Stanley Black vs. Snap on Incorporated | Stanley Black vs. Toro Co | Stanley Black vs. Lincoln Electric Holdings | Stanley Black vs. AB SKF |
| Snap On vs. Stanley Black Decker | Snap On vs. Toro Co | Snap On vs. Lincoln Electric Holdings | Snap On 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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