Correlation Between Global Net and Snap On

Can any of the company-specific risk be diversified away by investing in both Global Net 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 Global Net and Snap On into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Global Net Lease and Snap On, you can compare the effects of market volatilities on Global Net 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 Global Net with a short position of Snap On. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Net and Snap On.

Diversification Opportunities for Global Net and Snap On

-0.08

Correlation Coefficient

Global Net  Snap On

Good diversification

The 3 months correlation between Global and Snap is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Global Net Lease and Snap On in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Snap On and Global Net 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 Global Net Lease 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 Global Net i.e., Global Net and Snap On go up and down completely randomly.

Pair Corralation between Global Net and Snap On

Assuming the 90 days trading horizon Global Net Lease is expected to under-perform the Snap On. In addition to that, Global Net is 1.27 times more volatile than Snap On. It trades about -0.01 of its total potential returns per unit of risk. Snap On is currently generating about 0.11 per unit of volatility. If you would invest  32,370  in Snap On on October 24, 2024 and sell it today you would earn a total of  2,480  from holding Snap On or generate 7.66% return on investment over 90 days.

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

Global Net Lease  vs.  Snap On

Global Net Lease

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Net Lease has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, Global Net is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Snap On

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Snap On are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Snap On may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Global Net and Snap On

The main advantage of trading using opposite Global Net and Snap On positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Net 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 Global Net Lease 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.

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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.