Correlation Between Husqvarna and Snap On
Can any of the company-specific risk be diversified away by investing in both Husqvarna 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 Husqvarna and Snap On into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Husqvarna AB and Snap On, you can compare the effects of market volatilities on Husqvarna 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 Husqvarna with a short position of Snap On. Check out your portfolio center. Please also check ongoing floating volatility patterns of Husqvarna and Snap On.
Diversification Opportunities for Husqvarna and Snap On
Poor diversification
The 3 months correlation between Husqvarna and Snap is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Husqvarna AB and Snap On in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Snap On and Husqvarna 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 Husqvarna AB 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 Husqvarna i.e., Husqvarna and Snap On go up and down completely randomly.
Pair Corralation between Husqvarna and Snap On
Assuming the 90 days horizon Husqvarna AB is expected to under-perform the Snap On. In addition to that, Husqvarna is 1.55 times more volatile than Snap On. It trades about 0.0 of its total potential returns per unit of risk. Snap On is currently generating about 0.03 per unit of volatility. If you would invest 24,230 in Snap On on January 24, 2024 and sell it today you would earn a total of 2,904 from holding Snap On or generate 11.99% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Husqvarna AB vs. Snap On
Performance |
Timeline |
Husqvarna AB |
Snap On |
Husqvarna and Snap On Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Husqvarna and Snap On
The main advantage of trading using opposite Husqvarna and Snap On positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Husqvarna 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.Husqvarna vs. AB SKF | Husqvarna vs. Toro Co | Husqvarna vs. Stanley Black Decker | Husqvarna vs. Timken Company |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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