Correlation Between Snap and Critical Metals
Can any of the company-specific risk be diversified away by investing in both Snap and Critical Metals 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 Critical Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Critical Metals Corp, you can compare the effects of market volatilities on Snap and Critical Metals 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 Critical Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Critical Metals.
Diversification Opportunities for Snap and Critical Metals
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Snap and Critical is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Critical Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Critical Metals 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 Critical Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Critical Metals Corp has no effect on the direction of Snap i.e., Snap and Critical Metals go up and down completely randomly.
Pair Corralation between Snap and Critical Metals
Given the investment horizon of 90 days Snap Inc is expected to generate 1.25 times more return on investment than Critical Metals. However, Snap is 1.25 times more volatile than Critical Metals Corp. It trades about 0.12 of its potential returns per unit of risk. Critical Metals Corp is currently generating about -0.04 per unit of risk. If you would invest 1,027 in Snap Inc on August 25, 2024 and sell it today you would earn a total of 115.00 from holding Snap Inc or generate 11.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snap Inc vs. Critical Metals Corp
Performance |
| Timeline |
| Snap Inc |
| Critical Metals Corp |
Snap and Critical Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Critical Metals
The main advantage of trading using opposite Snap and Critical Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Critical Metals 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 Critical Metals will offset losses from the drop in Critical Metals' long position.The idea behind Snap Inc and Critical Metals 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.| Critical Metals vs. Relx PLC ADR | Critical Metals vs. WEBTOON Entertainment Common | Critical Metals vs. AMREP | Critical Metals vs. Afya |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
Other Complementary Tools
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Commodity Directory Find actively traded commodities issued by global exchanges |