Correlation Between Stanley Black and Eastern
Can any of the company-specific risk be diversified away by investing in both Stanley Black and Eastern 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 Eastern 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 Eastern Co, you can compare the effects of market volatilities on Stanley Black and Eastern 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 Eastern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stanley Black and Eastern.
Diversification Opportunities for Stanley Black and Eastern
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Stanley and Eastern is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Stanley Black Decker and Eastern Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern 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 Eastern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern has no effect on the direction of Stanley Black i.e., Stanley Black and Eastern go up and down completely randomly.
Pair Corralation between Stanley Black and Eastern
Considering the 90-day investment horizon Stanley Black Decker is expected to under-perform the Eastern. But the stock apears to be less risky and, when comparing its historical volatility, Stanley Black Decker is 1.13 times less risky than Eastern. The stock trades about -0.29 of its potential returns per unit of risk. The Eastern Co is currently generating about -0.21 of returns per unit of risk over similar time horizon. If you would invest 3,222 in Eastern Co on August 24, 2024 and sell it today you would lose (403.00) from holding Eastern Co or give up 12.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stanley Black Decker vs. Eastern Co
Performance |
| Timeline |
| Stanley Black Decker |
| Eastern |
Stanley Black and Eastern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stanley Black and Eastern
The main advantage of trading using opposite Stanley Black and Eastern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stanley Black position performs unexpectedly, Eastern 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 Eastern will offset losses from the drop in Eastern's long position.| Stanley Black vs. Kennametal | Stanley Black vs. AB SKF | Stanley Black vs. Eastern Co | Stanley Black vs. Timken Company |
| Eastern vs. Timken Company | Eastern vs. Lincoln Electric Holdings | Eastern vs. Hillman Solutions Corp | Eastern 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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