Correlation Between Snap and CIB Marine
Can any of the company-specific risk be diversified away by investing in both Snap and CIB Marine 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 CIB Marine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and CIB Marine Bancshares, you can compare the effects of market volatilities on Snap and CIB Marine 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 CIB Marine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and CIB Marine.
Diversification Opportunities for Snap and CIB Marine
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Snap and CIB is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and CIB Marine Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIB Marine Bancshares 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 CIB Marine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIB Marine Bancshares has no effect on the direction of Snap i.e., Snap and CIB Marine go up and down completely randomly.
Pair Corralation between Snap and CIB Marine
Given the investment horizon of 90 days Snap Inc is expected to generate 2.62 times more return on investment than CIB Marine. However, Snap is 2.62 times more volatile than CIB Marine Bancshares. It trades about 0.08 of its potential returns per unit of risk. CIB Marine Bancshares is currently generating about 0.05 per unit of risk. If you would invest 1,089 in Snap Inc on August 30, 2024 and sell it today you would earn a total of 72.00 from holding Snap Inc or generate 6.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Snap Inc vs. CIB Marine Bancshares
Performance |
| Timeline |
| Snap Inc |
| CIB Marine Bancshares |
Snap and CIB Marine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and CIB Marine
The main advantage of trading using opposite Snap and CIB Marine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, CIB Marine 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 CIB Marine will offset losses from the drop in CIB Marine's long position.The idea behind Snap Inc and CIB Marine Bancshares 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.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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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