Correlation Between Stanley Black and Oshkosh

Can any of the company-specific risk be diversified away by investing in both Stanley Black 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 Stanley Black and Oshkosh 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 Oshkosh, you can compare the effects of market volatilities on Stanley Black 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 Stanley Black with a short position of Oshkosh. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stanley Black and Oshkosh.

Diversification Opportunities for Stanley Black and Oshkosh

0.61

Correlation Coefficient

Stanley Black  Oshkosh

Poor diversification

The 3 months correlation between Stanley and Oshkosh is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Stanley Black Decker and Oshkosh in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oshkosh 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 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 Stanley Black i.e., Stanley Black and Oshkosh go up and down completely randomly.

Pair Corralation between Stanley Black and Oshkosh

Considering the 90-day investment horizon Stanley Black Decker is expected to under-perform the Oshkosh. In addition to that, Stanley Black is 1.27 times more volatile than Oshkosh. It trades about -0.1 of its total potential returns per unit of risk. Oshkosh is currently generating about 0.01 per unit of volatility. If you would invest  12,022  in Oshkosh on January 25, 2024 and sell it today you would earn a total of  25.00  from holding Oshkosh or generate 0.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Stanley Black Decker  vs.  Oshkosh

Stanley Black Decker

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stanley Black Decker has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Stanley Black is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Oshkosh

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Oshkosh are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Oshkosh may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Stanley Black and Oshkosh

The main advantage of trading using opposite Stanley Black and Oshkosh positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stanley Black 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 Stanley Black Decker 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.