Correlation Between Snap and INVITATION HOMES
Can any of the company-specific risk be diversified away by investing in both Snap and INVITATION HOMES 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 and INVITATION HOMES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and INVITATION HOMES DL, you can compare the effects of market volatilities on Snap and INVITATION HOMES 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 with a short position of INVITATION HOMES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and INVITATION HOMES.
Diversification Opportunities for Snap and INVITATION HOMES
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Snap and INVITATION is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and INVITATION HOMES DL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INVITATION HOMES and Snap 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 Inc are associated (or correlated) with INVITATION HOMES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INVITATION HOMES has no effect on the direction of Snap i.e., Snap and INVITATION HOMES go up and down completely randomly.
Pair Corralation between Snap and INVITATION HOMES
Assuming the 90 days horizon Snap Inc is expected to generate 3.16 times more return on investment than INVITATION HOMES. However, Snap is 3.16 times more volatile than INVITATION HOMES DL. It trades about 0.12 of its potential returns per unit of risk. INVITATION HOMES DL is currently generating about 0.03 per unit of risk. If you would invest 1,103 in Snap Inc on September 13, 2024 and sell it today you would earn a total of 88.00 from holding Snap Inc or generate 7.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Snap Inc vs. INVITATION HOMES DL
Performance |
| Timeline |
| Snap Inc |
| INVITATION HOMES |
Snap and INVITATION HOMES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and INVITATION HOMES
The main advantage of trading using opposite Snap and INVITATION HOMES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, INVITATION HOMES 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 INVITATION HOMES will offset losses from the drop in INVITATION HOMES's long position.| Snap vs. INVITATION HOMES DL | Snap vs. Focus Home Interactive | Snap vs. Autohome ADR | Snap vs. Haier Smart Home |
| INVITATION HOMES vs. American Homes 4 | INVITATION HOMES vs. Superior Plus Corp | INVITATION HOMES vs. SIVERS SEMICONDUCTORS AB | INVITATION HOMES vs. NorAm Drilling AS |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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