Correlation Between Stanley Black and Techtronic Industries
Can any of the company-specific risk be diversified away by investing in both Stanley Black and Techtronic Industries 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 Techtronic Industries 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 Techtronic Industries, you can compare the effects of market volatilities on Stanley Black and Techtronic Industries 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 Techtronic Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stanley Black and Techtronic Industries.
Diversification Opportunities for Stanley Black and Techtronic Industries
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Stanley and Techtronic is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Stanley Black Decker and Techtronic Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Techtronic Industries 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 Techtronic Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Techtronic Industries has no effect on the direction of Stanley Black i.e., Stanley Black and Techtronic Industries go up and down completely randomly.
Pair Corralation between Stanley Black and Techtronic Industries
Assuming the 90 days horizon Stanley Black is expected to generate 2.29 times less return on investment than Techtronic Industries. But when comparing it to its historical volatility, Stanley Black Decker is 1.32 times less risky than Techtronic Industries. It trades about 0.03 of its potential returns per unit of risk. Techtronic Industries is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 730.00 in Techtronic Industries on September 14, 2024 and sell it today you would earn a total of 550.00 from holding Techtronic Industries or generate 75.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Stanley Black Decker vs. Techtronic Industries
Performance |
| Timeline |
| Stanley Black Decker |
| Techtronic Industries |
Stanley Black and Techtronic Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stanley Black and Techtronic Industries
The main advantage of trading using opposite Stanley Black and Techtronic Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stanley Black position performs unexpectedly, Techtronic Industries 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 Techtronic Industries will offset losses from the drop in Techtronic Industries' long position.| Stanley Black vs. Techtronic Industries | Stanley Black vs. Toro Co | Stanley Black vs. Lincoln Electric Holdings | Stanley Black vs. AB SKF |
| Techtronic Industries vs. Stanley Black Decker | Techtronic Industries vs. Toro Co | Techtronic Industries vs. Lincoln Electric Holdings | Techtronic Industries 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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