Correlation Between Snap and Alstom SA
Can any of the company-specific risk be diversified away by investing in both Snap and Alstom SA 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 Alstom SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Alstom SA, you can compare the effects of market volatilities on Snap and Alstom SA 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 Alstom SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Alstom SA.
Diversification Opportunities for Snap and Alstom SA
Average diversification
The 3 months correlation between Snap and Alstom is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Alstom SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alstom 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 Alstom SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alstom SA has no effect on the direction of Snap i.e., Snap and Alstom SA go up and down completely randomly.
Pair Corralation between Snap and Alstom SA
Given the investment horizon of 90 days Snap Inc is expected to under-perform the Alstom SA. In addition to that, Snap is 2.78 times more volatile than Alstom SA. It trades about -0.07 of its total potential returns per unit of risk. Alstom SA is currently generating about 0.07 per unit of volatility. If you would invest 2,255 in Alstom SA on October 7, 2024 and sell it today you would earn a total of 26.00 from holding Alstom SA or generate 1.15% 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. Alstom SA
Performance |
| Timeline |
| Snap Inc |
| Alstom SA |
Snap and Alstom SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Alstom SA
The main advantage of trading using opposite Snap and Alstom SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Alstom SA 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 Alstom SA will offset losses from the drop in Alstom SA's long position.The idea behind Snap Inc and Alstom 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.| Alstom SA vs. Westinghouse Air Brake | Alstom SA vs. Canadian Pacific Railway | Alstom SA vs. Trinity Industries | Alstom SA vs. CSX Corporation |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like |