Correlation Between Snap and Chase Growth
Can any of the company-specific risk be diversified away by investing in both Snap and Chase Growth 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 Chase Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Chase Growth Fund, you can compare the effects of market volatilities on Snap and Chase Growth 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 Chase Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Chase Growth.
Diversification Opportunities for Snap and Chase Growth
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Snap and Chase is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Chase Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chase Growth 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 Chase Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chase Growth has no effect on the direction of Snap i.e., Snap and Chase Growth go up and down completely randomly.
Pair Corralation between Snap and Chase Growth
Given the investment horizon of 90 days Snap Inc is expected to generate 4.48 times more return on investment than Chase Growth. However, Snap is 4.48 times more volatile than Chase Growth Fund. It trades about 0.09 of its potential returns per unit of risk. Chase Growth Fund is currently generating about 0.24 per unit of risk. If you would invest 1,071 in Snap Inc on August 27, 2024 and sell it today you would earn a total of 71.00 from holding Snap Inc or generate 6.63% 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. Chase Growth Fund
Performance |
| Timeline |
| Snap Inc |
| Chase Growth |
Snap and Chase Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Chase Growth
The main advantage of trading using opposite Snap and Chase Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Chase Growth 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 Chase Growth will offset losses from the drop in Chase Growth's long position.The idea behind Snap Inc and Chase Growth Fund 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.| Chase Growth vs. Vanguard Explorer Fund | Chase Growth vs. Vanguard Treasury Money | Chase Growth vs. Sterling Capital Stratton | Chase Growth vs. Growth Fund Of |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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