Correlation Between Snap and Union Bank
Can any of the company-specific risk be diversified away by investing in both Snap and Union Bank 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 Union Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Union Bank of, you can compare the effects of market volatilities on Snap and Union Bank 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 Union Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Union Bank.
Diversification Opportunities for Snap and Union Bank
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Snap and Union is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Union Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Bank 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 Union Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Bank has no effect on the direction of Snap i.e., Snap and Union Bank go up and down completely randomly.
Pair Corralation between Snap and Union Bank
Given the investment horizon of 90 days Snap Inc is expected to under-perform the Union Bank. In addition to that, Snap is 3.96 times more volatile than Union Bank of. It trades about -0.11 of its total potential returns per unit of risk. Union Bank of is currently generating about 0.12 per unit of volatility. If you would invest 1,520 in Union Bank of on August 31, 2024 and sell it today you would earn a total of 30.00 from holding Union Bank of or generate 1.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snap Inc vs. Union Bank of
Performance |
| Timeline |
| Snap Inc |
| Union Bank |
Snap and Union Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Union Bank
The main advantage of trading using opposite Snap and Union Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Union Bank 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 Union Bank will offset losses from the drop in Union Bank's long position.The idea behind Snap Inc and Union Bank of 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.| Union Bank vs. Central Reinsurance Corp | Union Bank vs. Huaku Development Co | Union Bank vs. Fubon Financial Holding | Union Bank vs. CTBC Financial Holding |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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