Correlation Between Dassault Systemes and Snowflake
Can any of the company-specific risk be diversified away by investing in both Dassault Systemes and Snowflake 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 Dassault Systemes and Snowflake into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dassault Systemes SE and Snowflake, you can compare the effects of market volatilities on Dassault Systemes and Snowflake 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 Dassault Systemes with a short position of Snowflake. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dassault Systemes and Snowflake.
Diversification Opportunities for Dassault Systemes and Snowflake
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dassault and Snowflake is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Dassault Systemes SE and Snowflake in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Snowflake and Dassault Systemes 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 Dassault Systemes SE are associated (or correlated) with Snowflake. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Snowflake has no effect on the direction of Dassault Systemes i.e., Dassault Systemes and Snowflake go up and down completely randomly.
Pair Corralation between Dassault Systemes and Snowflake
Assuming the 90 days horizon Dassault Systemes is expected to generate 3.48 times less return on investment than Snowflake. But when comparing it to its historical volatility, Dassault Systemes SE is 4.21 times less risky than Snowflake. It trades about 0.24 of its potential returns per unit of risk. Snowflake is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 13,073 in Snowflake on September 14, 2024 and sell it today you would earn a total of 3,927 from holding Snowflake or generate 30.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dassault Systemes SE vs. Snowflake
Performance |
| Timeline |
| Dassault Systemes |
| Snowflake |
Dassault Systemes and Snowflake Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dassault Systemes and Snowflake
The main advantage of trading using opposite Dassault Systemes and Snowflake positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dassault Systemes position performs unexpectedly, Snowflake 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 Snowflake will offset losses from the drop in Snowflake's long position.| Dassault Systemes vs. Sage Group PLC | Dassault Systemes vs. Xero Limited | Dassault Systemes vs. RenoWorks Software | Dassault Systemes vs. 01 Communique Laboratory |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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