Correlation Between Smoore International and Snap On

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Can any of the company-specific risk be diversified away by investing in both Smoore International 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 Smoore International and Snap On into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smoore International Holdings and Snap On, you can compare the effects of market volatilities on Smoore International 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 Smoore International with a short position of Snap On. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smoore International and Snap On.

Diversification Opportunities for Smoore International and Snap On

0.27
  Correlation Coefficient

Modest diversification

The 3 months correlation between Smoore and Snap is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Smoore International Holdings and Snap-On in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Snap-On and Smoore International 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 Smoore International Holdings 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 Smoore International i.e., Smoore International and Snap On go up and down completely randomly.

Pair Corralation between Smoore International and Snap On

Assuming the 90 days horizon Smoore International Holdings is expected to generate 9.97 times more return on investment than Snap On. However, Smoore International is 9.97 times more volatile than Snap On. It trades about 0.2 of its potential returns per unit of risk. Snap On is currently generating about 0.34 per unit of risk. If you would invest  60.00  in Smoore International Holdings on December 29, 2023 and sell it today you would earn a total of  28.00  from holding Smoore International Holdings or generate 46.67% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Smoore International Holdings  vs.  Snap-On

 Performance 
       Timeline  
Smoore International 

Risk-Adjusted Performance

4 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Smoore International Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Smoore International reported solid returns over the last few months and may actually be approaching a breakup point.
Snap-On 

Risk-Adjusted Performance

3 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Snap On are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Snap On is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Smoore International and Snap On Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Smoore International and Snap On

The main advantage of trading using opposite Smoore International and Snap On positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smoore International 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.
The idea behind Smoore International Holdings and Snap On pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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