Correlation Between Snowflake and S A P
Can any of the company-specific risk be diversified away by investing in both Snowflake and S A P 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 Snowflake and S A P into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snowflake and SAP SE, you can compare the effects of market volatilities on Snowflake and S A P 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 Snowflake with a short position of S A P. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snowflake and S A P.
Diversification Opportunities for Snowflake and S A P
Poor diversification
The 3 months correlation between Snowflake and SAP is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Snowflake and SAP SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAP SE and Snowflake 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 Snowflake are associated (or correlated) with S A P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAP SE has no effect on the direction of Snowflake i.e., Snowflake and S A P go up and down completely randomly.
Pair Corralation between Snowflake and S A P
Assuming the 90 days horizon Snowflake is expected to generate 1.57 times less return on investment than S A P. In addition to that, Snowflake is 1.28 times more volatile than SAP SE. It trades about 0.19 of its total potential returns per unit of risk. SAP SE is currently generating about 0.38 per unit of volatility. If you would invest 23,760 in SAP SE on October 20, 2024 and sell it today you would earn a total of 1,795 from holding SAP SE or generate 7.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snowflake vs. SAP SE
Performance |
| Timeline |
| Snowflake |
| SAP SE |
Snowflake and S A P Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snowflake and S A P
The main advantage of trading using opposite Snowflake and S A P positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snowflake position performs unexpectedly, S A P 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 S A P will offset losses from the drop in S A P's long position.| Snowflake vs. Penn National Gaming | Snowflake vs. MAVEN WIRELESS SWEDEN | Snowflake vs. CENTURIA OFFICE REIT | Snowflake vs. International Game Technology |
| S A P vs. NEW MILLENNIUM IRON | S A P vs. Nippon Steel | S A P vs. Indutrade AB | S A P vs. CALTAGIRONE EDITORE |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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