Correlation Between Stanley Black and Husqvarna

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

Diversification Opportunities for Stanley Black and Husqvarna

0.0

Correlation Coefficient

Stanley Black  Husqvarna

Pay attention - limited upside

The 3 months correlation between Stanley and Husqvarna is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Stanley Black Decker and Husqvarna AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Husqvarna AB 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 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 Stanley Black i.e., Stanley Black and Husqvarna go up and down completely randomly.

Pair Corralation between Stanley Black and Husqvarna

Considering the 90-day investment horizon Stanley Black Decker is expected to under-perform the Husqvarna. But the stock apears to be less risky and, when comparing its historical volatility, Stanley Black Decker is 1.84 times less risky than Husqvarna. The stock trades about -0.01 of its potential returns per unit of risk. The Husqvarna AB is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  640.00  in Husqvarna AB on October 9, 2024 and sell it today you would lose (10.00) from holding Husqvarna AB or give up 1.56% of portfolio value over 90 days.

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

Stanley Black Decker  vs.  Husqvarna AB

Stanley Black Decker

Risk-Adjusted Performance

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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 unsteady performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Husqvarna AB

Risk-Adjusted Performance

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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 Stanley Black and Husqvarna

The main advantage of trading using opposite Stanley Black and Husqvarna positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stanley Black 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 Stanley Black Decker 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.

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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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.