Correlation Between Snap and Baytex Energy
Can any of the company-specific risk be diversified away by investing in both Snap and Baytex Energy 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 Baytex Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Baytex Energy Corp, you can compare the effects of market volatilities on Snap and Baytex Energy 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 Baytex Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Baytex Energy.
Diversification Opportunities for Snap and Baytex Energy
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Snap and Baytex is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Baytex Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baytex Energy Corp 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 Baytex Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baytex Energy Corp has no effect on the direction of Snap i.e., Snap and Baytex Energy go up and down completely randomly.
Pair Corralation between Snap and Baytex Energy
Given the investment horizon of 90 days Snap Inc is expected to generate 1.73 times more return on investment than Baytex Energy. However, Snap is 1.73 times more volatile than Baytex Energy Corp. It trades about 0.0 of its potential returns per unit of risk. Baytex Energy Corp is currently generating about -0.02 per unit of risk. If you would invest 1,430 in Snap Inc on August 29, 2024 and sell it today you would lose (270.00) from holding Snap Inc or give up 18.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snap Inc vs. Baytex Energy Corp
Performance |
| Timeline |
| Snap Inc |
| Baytex Energy Corp |
Snap and Baytex Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Baytex Energy
The main advantage of trading using opposite Snap and Baytex Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Baytex Energy 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 Baytex Energy will offset losses from the drop in Baytex Energy's long position.The idea behind Snap Inc and Baytex Energy Corp 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.| Baytex Energy vs. MEG Energy Corp | Baytex Energy vs. Whitecap Resources | Baytex Energy vs. Athabasca Oil Corp | Baytex Energy vs. Cenovus Energy |
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.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |