Correlation Between Snap and Alphatec Holdings
Can any of the company-specific risk be diversified away by investing in both Snap and Alphatec Holdings 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 Alphatec Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Alphatec Holdings, you can compare the effects of market volatilities on Snap and Alphatec Holdings 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 Alphatec Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Alphatec Holdings.
Diversification Opportunities for Snap and Alphatec Holdings
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Snap and Alphatec is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Alphatec Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alphatec Holdings 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 Alphatec Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alphatec Holdings has no effect on the direction of Snap i.e., Snap and Alphatec Holdings go up and down completely randomly.
Pair Corralation between Snap and Alphatec Holdings
Given the investment horizon of 90 days Snap Inc is expected to generate 0.98 times more return on investment than Alphatec Holdings. However, Snap Inc is 1.02 times less risky than Alphatec Holdings. It trades about 0.03 of its potential returns per unit of risk. Alphatec Holdings is currently generating about 0.01 per unit of risk. If you would invest 920.00 in Snap Inc on August 31, 2024 and sell it today you would earn a total of 241.00 from holding Snap Inc or generate 26.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Snap Inc vs. Alphatec Holdings
Performance |
| Timeline |
| Snap Inc |
| Alphatec Holdings |
Snap and Alphatec Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Alphatec Holdings
The main advantage of trading using opposite Snap and Alphatec Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Alphatec Holdings 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 Alphatec Holdings will offset losses from the drop in Alphatec Holdings' long position.The idea behind Snap Inc and Alphatec Holdings 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.| Alphatec Holdings vs. Globus Medical | Alphatec Holdings vs. Orthofix Medical | Alphatec Holdings vs. CONMED | Alphatec Holdings vs. LivaNova PLC |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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