Correlation Between Snap and Adidas AG
Can any of the company-specific risk be diversified away by investing in both Snap and Adidas AG 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 Adidas AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and adidas AG, you can compare the effects of market volatilities on Snap and Adidas AG 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 Adidas AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Adidas AG.
Diversification Opportunities for Snap and Adidas AG
Significant diversification
The 3 months correlation between Snap and Adidas is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and adidas AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on adidas AG 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 Adidas AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of adidas AG has no effect on the direction of Snap i.e., Snap and Adidas AG go up and down completely randomly.
Pair Corralation between Snap and Adidas AG
Given the investment horizon of 90 days Snap Inc is expected to generate 2.23 times more return on investment than Adidas AG. However, Snap is 2.23 times more volatile than adidas AG. It trades about 0.03 of its potential returns per unit of risk. adidas AG is currently generating about 0.06 per unit of risk. If you would invest 1,004 in Snap Inc on August 31, 2024 and sell it today you would earn a total of 177.00 from holding Snap Inc or generate 17.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.16% |
| Values | Daily Returns |
Snap Inc vs. adidas AG
Performance |
| Timeline |
| Snap Inc |
| adidas AG |
Snap and Adidas AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Adidas AG
The main advantage of trading using opposite Snap and Adidas AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Adidas AG 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 Adidas AG will offset losses from the drop in Adidas AG's long position.The idea behind Snap Inc and adidas AG 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.| Adidas AG vs. GEAR4MUSIC LS 10 | Adidas AG vs. BRIT AMER TOBACCO | Adidas AG vs. Sumitomo Rubber Industries | Adidas AG vs. EAGLE MATERIALS |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |