Correlation Between Snap and Aena SME
Can any of the company-specific risk be diversified away by investing in both Snap and Aena SME 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 Aena SME into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Aena SME SA, you can compare the effects of market volatilities on Snap and Aena SME 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 Aena SME. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Aena SME.
Diversification Opportunities for Snap and Aena SME
Very weak diversification
The 3 months correlation between Snap and Aena is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Aena SME SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aena SME SA 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 Aena SME. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aena SME SA has no effect on the direction of Snap i.e., Snap and Aena SME go up and down completely randomly.
Pair Corralation between Snap and Aena SME
Given the investment horizon of 90 days Snap Inc is expected to generate 5.33 times more return on investment than Aena SME. However, Snap is 5.33 times more volatile than Aena SME SA. It trades about 0.1 of its potential returns per unit of risk. Aena SME SA is currently generating about -0.26 per unit of risk. If you would invest 1,071 in Snap Inc on August 29, 2024 and sell it today you would earn a total of 89.00 from holding Snap Inc or generate 8.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snap Inc vs. Aena SME SA
Performance |
| Timeline |
| Snap Inc |
| Aena SME SA |
Snap and Aena SME Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Aena SME
The main advantage of trading using opposite Snap and Aena SME positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Aena SME 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 Aena SME will offset losses from the drop in Aena SME's long position.The idea behind Snap Inc and Aena SME SA 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.| Aena SME vs. Aeroports de Paris | Aena SME vs. Corporacion America Airports | Aena SME vs. Grupo Aeroportuario del | Aena SME vs. Grupo Aeroportuario del |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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