Correlation Between Snap and Calumet Specialty
Can any of the company-specific risk be diversified away by investing in both Snap and Calumet Specialty 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 Calumet Specialty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Calumet Specialty Products, you can compare the effects of market volatilities on Snap and Calumet Specialty 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 Calumet Specialty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Calumet Specialty.
Diversification Opportunities for Snap and Calumet Specialty
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Snap and Calumet is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Calumet Specialty Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calumet Specialty 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 Calumet Specialty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calumet Specialty has no effect on the direction of Snap i.e., Snap and Calumet Specialty go up and down completely randomly.
Pair Corralation between Snap and Calumet Specialty
Given the investment horizon of 90 days Snap Inc is expected to under-perform the Calumet Specialty. But the stock apears to be less risky and, when comparing its historical volatility, Snap Inc is 1.15 times less risky than Calumet Specialty. The stock trades about -0.03 of its potential returns per unit of risk. The Calumet Specialty Products is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,133 in Calumet Specialty Products on September 1, 2024 and sell it today you would earn a total of 121.00 from holding Calumet Specialty Products or generate 5.67% 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. Calumet Specialty Products
Performance |
| Timeline |
| Snap Inc |
| Calumet Specialty |
Snap and Calumet Specialty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Calumet Specialty
The main advantage of trading using opposite Snap and Calumet Specialty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Calumet Specialty 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 Calumet Specialty will offset losses from the drop in Calumet Specialty's long position.The idea behind Snap Inc and Calumet Specialty Products 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.| Calumet Specialty vs. Battalion Oil Corp | Calumet Specialty vs. Granite Ridge Resources | Calumet Specialty vs. GeoPark | Calumet Specialty vs. Crescent Energy Co |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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