Correlation Between Snap On and Oshkosh
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
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 Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Snap-On vs. Oshkosh
Performance |
Timeline |
Snap-On |
Oshkosh |
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.Snap On vs. RBC Bearings Incorporated | Snap On vs. Timken Company | Snap On vs. Toro Co | Snap On vs. QEP Co Inc |
Oshkosh vs. Deere Company | Oshkosh vs. Manitex International | Oshkosh vs. Alamo Group | Oshkosh vs. Caterpillar |
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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