Correlation Between Snap On and Oshkosh

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

Diversification Opportunities for Snap On and Oshkosh

0.45
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Snap and Oshkosh is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Snap-On and Oshkosh in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oshkosh and Snap On 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 Snap On are associated (or correlated) with Oshkosh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oshkosh has no effect on the direction of Snap On i.e., Snap On and Oshkosh go up and down completely randomly.

Pair Corralation between Snap On and Oshkosh

Considering the 90-day investment horizon Snap On is expected to generate 1.08 times less return on investment than Oshkosh. But when comparing it to its historical volatility, Snap On is 1.32 times less risky than Oshkosh. It trades about 0.06 of its potential returns per unit of risk. Oshkosh is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  8,763  in Oshkosh on December 30, 2023 and sell it today you would earn a total of  3,708  from holding Oshkosh or generate 42.31% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Snap-On  vs.  Oshkosh

 Performance 
       Timeline  
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 latest stock price disturbance, may contribute to short-term losses for the investors.
Oshkosh 

Risk-Adjusted Performance

12 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Oshkosh are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Oshkosh disclosed solid returns over the last few months and may actually be approaching a breakup point.

Snap On and Oshkosh Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Snap On and Oshkosh

The main advantage of trading using opposite Snap On and Oshkosh positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap On position performs unexpectedly, Oshkosh 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 Oshkosh will offset losses from the drop in Oshkosh's long position.
The idea behind Snap On and Oshkosh 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.

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