Correlation Between Snap On and Husqvarna

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

By analyzing existing cross correlation between Snap On and Husqvarna AB, you can compare the effects of market volatilities on Snap On and Husqvarna 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 Husqvarna. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap On and Husqvarna.

Diversification Opportunities for Snap On and Husqvarna

0.0

Correlation Coefficient

Snap On  Husqvarna

Pay attention - limited upside

The 3 months correlation between Snap and Husqvarna is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Snap On and Husqvarna AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Husqvarna AB 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 Husqvarna. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Husqvarna AB has no effect on the direction of Snap On i.e., Snap On and Husqvarna go up and down completely randomly.

Pair Corralation between Snap On and Husqvarna

Considering the 90-day investment horizon Snap On is expected to generate 0.42 times more return on investment than Husqvarna. However, Snap On is 2.41 times less risky than Husqvarna. It trades about 0.06 of its potential returns per unit of risk. Husqvarna AB is currently generating about 0.02 per unit of risk. If you would invest  27,762  in Snap On on October 9, 2024 and sell it today you would earn a total of  5,804  from holding Snap On or generate 20.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	74.49%
Values	Daily Returns

Snap On  vs.  Husqvarna AB

Snap On

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Snap On are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Snap On sustained solid returns over the last few months and may actually be approaching a breakup point.

Husqvarna AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Husqvarna AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Husqvarna is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Snap On and Husqvarna

The main advantage of trading using opposite Snap On and Husqvarna positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap On position performs unexpectedly, Husqvarna 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 Husqvarna will offset losses from the drop in Husqvarna's long position.

The idea behind Snap On and Husqvarna AB 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.