Correlation Between Snap On and Veralto

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

Diversification Opportunities for Snap On and Veralto

-0.25
  Correlation Coefficient

Very good diversification

The 3 months correlation between Snap and Veralto is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Snap On and Veralto in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veralto 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 Veralto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Veralto has no effect on the direction of Snap On i.e., Snap On and Veralto go up and down completely randomly.

Pair Corralation between Snap On and Veralto

Considering the 90-day investment horizon Snap On is expected to generate 1.0 times more return on investment than Veralto. However, Snap On is 1.0 times less risky than Veralto. It trades about 0.11 of its potential returns per unit of risk. Veralto is currently generating about -0.1 per unit of risk. If you would invest  32,329  in Snap On on October 23, 2024 and sell it today you would earn a total of  2,521  from holding Snap On or generate 7.8% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Snap On  vs.  Veralto

 Performance 
       Timeline  
Snap On 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
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.
Veralto 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Veralto has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Snap On and Veralto Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Snap On and Veralto

The main advantage of trading using opposite Snap On and Veralto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap On position performs unexpectedly, Veralto 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 Veralto will offset losses from the drop in Veralto's long position.
The idea behind Snap On and Veralto 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.

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