Correlation Between Snap and Atlas Energy
Can any of the company-specific risk be diversified away by investing in both Snap and Atlas Energy 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 Atlas Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Atlas Energy Solutions, you can compare the effects of market volatilities on Snap and Atlas Energy 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 Atlas Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Atlas Energy.
Diversification Opportunities for Snap and Atlas Energy
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Snap and Atlas is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Atlas Energy Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlas Energy Solutions 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 Atlas Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlas Energy Solutions has no effect on the direction of Snap i.e., Snap and Atlas Energy go up and down completely randomly.
Pair Corralation between Snap and Atlas Energy
Given the investment horizon of 90 days Snap is expected to generate 1.92 times less return on investment than Atlas Energy. In addition to that, Snap is 1.32 times more volatile than Atlas Energy Solutions. It trades about 0.1 of its total potential returns per unit of risk. Atlas Energy Solutions is currently generating about 0.26 per unit of volatility. If you would invest 1,980 in Atlas Energy Solutions on August 27, 2024 and sell it today you would earn a total of 392.00 from holding Atlas Energy Solutions or generate 19.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snap Inc vs. Atlas Energy Solutions
Performance |
| Timeline |
| Snap Inc |
| Atlas Energy Solutions |
Snap and Atlas Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Atlas Energy
The main advantage of trading using opposite Snap and Atlas Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Atlas Energy 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 Atlas Energy will offset losses from the drop in Atlas Energy's long position.The idea behind Snap Inc and Atlas Energy Solutions 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.| Atlas Energy vs. Natural Gas Services | Atlas Energy vs. Archrock | Atlas Energy vs. Geospace Technologies | Atlas Energy vs. Newpark Resources |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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