Correlation Between Snap and Advantage Oil
Can any of the company-specific risk be diversified away by investing in both Snap and Advantage Oil 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 Advantage Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Advantage Oil Gas, you can compare the effects of market volatilities on Snap and Advantage Oil 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 Advantage Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Advantage Oil.
Diversification Opportunities for Snap and Advantage Oil
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Snap and Advantage is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Advantage Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advantage Oil Gas 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 Advantage Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advantage Oil Gas has no effect on the direction of Snap i.e., Snap and Advantage Oil go up and down completely randomly.
Pair Corralation between Snap and Advantage Oil
Given the investment horizon of 90 days Snap Inc is expected to under-perform the Advantage Oil. In addition to that, Snap is 1.21 times more volatile than Advantage Oil Gas. It trades about -0.03 of its total potential returns per unit of risk. Advantage Oil Gas is currently generating about 0.07 per unit of volatility. If you would invest 871.00 in Advantage Oil Gas on September 1, 2024 and sell it today you would earn a total of 29.00 from holding Advantage Oil Gas or generate 3.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Snap Inc vs. Advantage Oil Gas
Performance |
| Timeline |
| Snap Inc |
| Advantage Oil Gas |
Snap and Advantage Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Advantage Oil
The main advantage of trading using opposite Snap and Advantage Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Advantage Oil 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 Advantage Oil will offset losses from the drop in Advantage Oil's long position.The idea behind Snap Inc and Advantage Oil Gas 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.| Advantage Oil vs. Birchcliff Energy | Advantage Oil vs. NuVista Energy | Advantage Oil vs. Kelt Exploration | Advantage Oil vs. Peyto ExplorationDevelopment Corp |
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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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