Correlation Between Pinterest and Snap
Can any of the company-specific risk be diversified away by investing in both Pinterest and Snap 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 Pinterest and Snap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pinterest and Snap Inc, you can compare the effects of market volatilities on Pinterest and Snap 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 Pinterest with a short position of Snap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pinterest and Snap.
Diversification Opportunities for Pinterest and Snap
Weak diversification
The 3 months correlation between Pinterest and Snap is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Pinterest and Snap Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Snap Inc and Pinterest 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 Pinterest are associated (or correlated) with Snap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Snap Inc has no effect on the direction of Pinterest i.e., Pinterest and Snap go up and down completely randomly.
Pair Corralation between Pinterest and Snap
Given the investment horizon of 90 days Pinterest is expected to under-perform the Snap. But the stock apears to be less risky and, when comparing its historical volatility, Pinterest is 1.27 times less risky than Snap. The stock trades about -0.07 of its potential returns per unit of risk. The Snap Inc is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,071 in Snap Inc on August 27, 2024 and sell it today you would earn a total of 71.00 from holding Snap Inc or generate 6.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pinterest vs. Snap Inc
Performance |
| Timeline |
| Snap Inc |
Pinterest and Snap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pinterest and Snap
The main advantage of trading using opposite Pinterest and Snap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pinterest position performs unexpectedly, Snap 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 will offset losses from the drop in Snap's long position.| Pinterest vs. Alphabet Inc Class C | Pinterest vs. Twilio Inc | Pinterest vs. Snap Inc | Pinterest vs. Baidu Inc |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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