Correlation Between Snap and American Helium
Can any of the company-specific risk be diversified away by investing in both Snap and American Helium 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 American Helium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and American Helium, you can compare the effects of market volatilities on Snap and American Helium 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 American Helium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and American Helium.
Diversification Opportunities for Snap and American Helium
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Snap and American is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and American Helium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Helium 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 American Helium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Helium has no effect on the direction of Snap i.e., Snap and American Helium go up and down completely randomly.
Pair Corralation between Snap and American Helium
Given the investment horizon of 90 days Snap Inc is expected to generate 3.87 times more return on investment than American Helium. However, Snap is 3.87 times more volatile than American Helium. It trades about -0.03 of its potential returns per unit of risk. American Helium is currently generating about -0.21 per unit of risk. If you would invest 864.00 in Snap Inc on January 13, 2025 and sell it today you would lose (68.00) from holding Snap Inc or give up 7.87% 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. American Helium
Performance |
| Timeline |
| Snap Inc |
| American Helium |
Snap and American Helium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and American Helium
The main advantage of trading using opposite Snap and American Helium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, American Helium 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 American Helium will offset losses from the drop in American Helium's long position.The idea behind Snap Inc and American Helium 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.| American Helium vs. Huntsman Exploration | American Helium vs. Aurelia Metals Limited | American Helium vs. Adriatic Metals PLC | American Helium vs. Progressive Planet Solutions |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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