Correlation Between Snap and Avangrid
Can any of the company-specific risk be diversified away by investing in both Snap and Avangrid 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 Avangrid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Avangrid, you can compare the effects of market volatilities on Snap and Avangrid 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 Avangrid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Avangrid.
Diversification Opportunities for Snap and Avangrid
Modest diversification
The 3 months correlation between Snap and Avangrid is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Avangrid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avangrid 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 Avangrid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avangrid has no effect on the direction of Snap i.e., Snap and Avangrid go up and down completely randomly.
Pair Corralation between Snap and Avangrid
Given the investment horizon of 90 days Snap is expected to generate 1.93 times less return on investment than Avangrid. In addition to that, Snap is 3.38 times more volatile than Avangrid. It trades about 0.01 of its total potential returns per unit of risk. Avangrid is currently generating about 0.06 per unit of volatility. If you would invest 2,999 in Avangrid on August 24, 2024 and sell it today you would earn a total of 610.00 from holding Avangrid or generate 20.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snap Inc vs. Avangrid
Performance |
| Timeline |
| Snap Inc |
| Avangrid |
Snap and Avangrid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Avangrid
The main advantage of trading using opposite Snap and Avangrid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Avangrid 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 Avangrid will offset losses from the drop in Avangrid's long position.The idea behind Snap Inc and Avangrid 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.| Avangrid vs. Korea Electric Power | Avangrid vs. Centrais Electricas Brasileiras | Avangrid vs. MGE Energy | Avangrid vs. IDACORP |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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