Correlation Between Software Acquisition and Snap On

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

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

Diversification Opportunities for Software Acquisition and Snap On

0.17

Correlation Coefficient

Software Acquisition  Snap On

Average diversification

The 3 months correlation between Software and Snap is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Software Acquisition Group and Snap On in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Snap On and Software Acquisition 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 Software Acquisition Group 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 Software Acquisition i.e., Software Acquisition and Snap On go up and down completely randomly.

Pair Corralation between Software Acquisition and Snap On

Assuming the 90 days horizon Software Acquisition Group is expected to generate 17.96 times more return on investment than Snap On. However, Software Acquisition is 17.96 times more volatile than Snap On. It trades about 0.09 of its potential returns per unit of risk. Snap On is currently generating about 0.04 per unit of risk. If you would invest  1.59  in Software Acquisition Group on May 9, 2025 and sell it today you would lose (0.25) from holding Software Acquisition Group or give up 15.72% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	45.9%
Values	Daily Returns

Software Acquisition Group  vs.  Snap On

Software Acquisition

Risk-Adjusted Performance

Fair

Over the last 90 days Software Acquisition Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly uncertain technical and fundamental indicators, Software Acquisition showed solid returns over the last few months and may actually be approaching a breakup point.

Snap On

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Snap On are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Snap On is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Software Acquisition and Snap On

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

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.