Correlation Between Intuit and Snowflake
Can any of the company-specific risk be diversified away by investing in both Intuit 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 Intuit and Snowflake into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intuit Inc and Snowflake, you can compare the effects of market volatilities on Intuit 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 Intuit with a short position of Snowflake. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intuit and Snowflake.
Diversification Opportunities for Intuit and Snowflake
Very weak diversification
The 3 months correlation between Intuit and Snowflake is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Intuit Inc and Snowflake in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Snowflake and Intuit 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 Intuit Inc 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 Intuit i.e., Intuit and Snowflake go up and down completely randomly.
Pair Corralation between Intuit and Snowflake
Given the investment horizon of 90 days Intuit Inc is expected to generate 0.51 times more return on investment than Snowflake. However, Intuit Inc is 1.97 times less risky than Snowflake. It trades about 0.04 of its potential returns per unit of risk. Snowflake is currently generating about 0.0 per unit of risk. If you would invest 57,091 in Intuit Inc on August 27, 2024 and sell it today you would earn a total of 6,921 from holding Intuit Inc or generate 12.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Intuit Inc vs. Snowflake
Performance |
| Timeline |
| Intuit Inc |
| Snowflake |
Intuit and Snowflake Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intuit and Snowflake
The main advantage of trading using opposite Intuit and Snowflake positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intuit 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.The idea behind Intuit Inc and Snowflake 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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