Correlation Between Snap and Brooge Holdings
Can any of the company-specific risk be diversified away by investing in both Snap and Brooge 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 Brooge 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 Brooge Holdings, you can compare the effects of market volatilities on Snap and Brooge 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 Brooge Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Brooge Holdings.
Diversification Opportunities for Snap and Brooge Holdings
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Snap and Brooge is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Brooge Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brooge 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 Brooge Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brooge Holdings has no effect on the direction of Snap i.e., Snap and Brooge Holdings go up and down completely randomly.
Pair Corralation between Snap and Brooge Holdings
Given the investment horizon of 90 days Snap Inc is expected to generate 0.63 times more return on investment than Brooge Holdings. However, Snap Inc is 1.58 times less risky than Brooge Holdings. It trades about 0.11 of its potential returns per unit of risk. Brooge Holdings is currently generating about -0.18 per unit of risk. If you would invest 1,045 in Snap Inc on August 26, 2024 and sell it today you would earn a total of 97.00 from holding Snap Inc or generate 9.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snap Inc vs. Brooge Holdings
Performance |
| Timeline |
| Snap Inc |
| Brooge Holdings |
Snap and Brooge Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Brooge Holdings
The main advantage of trading using opposite Snap and Brooge Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Brooge 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 Brooge Holdings will offset losses from the drop in Brooge Holdings' long position.The idea behind Snap Inc and Brooge 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.| Brooge Holdings vs. Teekay | Brooge Holdings vs. Targa Resources | Brooge Holdings vs. Teekay Tankers | Brooge Holdings vs. Dynagas LNG Partners |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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