Correlation Between Snap and Abacus Life
Can any of the company-specific risk be diversified away by investing in both Snap and Abacus Life 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 Abacus Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Abacus Life, you can compare the effects of market volatilities on Snap and Abacus Life 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 Abacus Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Abacus Life.
Diversification Opportunities for Snap and Abacus Life
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Snap and Abacus is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Abacus Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abacus Life 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 Abacus Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abacus Life has no effect on the direction of Snap i.e., Snap and Abacus Life go up and down completely randomly.
Pair Corralation between Snap and Abacus Life
Given the investment horizon of 90 days Snap Inc is expected to under-perform the Abacus Life. But the stock apears to be less risky and, when comparing its historical volatility, Snap Inc is 1.31 times less risky than Abacus Life. The stock trades about -0.11 of its potential returns per unit of risk. The Abacus Life is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 866.00 in Abacus Life on August 31, 2024 and sell it today you would lose (58.00) from holding Abacus Life or give up 6.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snap Inc vs. Abacus Life
Performance |
| Timeline |
| Snap Inc |
| Abacus Life |
Snap and Abacus Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Abacus Life
The main advantage of trading using opposite Snap and Abacus Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Abacus Life 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 Abacus Life will offset losses from the drop in Abacus Life's long position.The idea behind Snap Inc and Abacus Life 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.| Abacus Life vs. FG Annuities Life | Abacus Life vs. Globe Life | Abacus Life vs. MetLife Preferred Stock | Abacus Life vs. MetLife Preferred Stock |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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