Correlation Between Snap and Continental
Can any of the company-specific risk be diversified away by investing in both Snap and Continental 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 Continental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Continental AG PK, you can compare the effects of market volatilities on Snap and Continental 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 Continental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Continental.
Diversification Opportunities for Snap and Continental
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Snap and Continental is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Continental AG PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Continental AG PK 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 Continental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Continental AG PK has no effect on the direction of Snap i.e., Snap and Continental go up and down completely randomly.
Pair Corralation between Snap and Continental
Given the investment horizon of 90 days Snap Inc is expected to generate 1.82 times more return on investment than Continental. However, Snap is 1.82 times more volatile than Continental AG PK. It trades about 0.03 of its potential returns per unit of risk. Continental AG PK is currently generating about 0.02 per unit of risk. If you would invest 945.00 in Snap Inc on August 30, 2024 and sell it today you would earn a total of 216.00 from holding Snap Inc or generate 22.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snap Inc vs. Continental AG PK
Performance |
| Timeline |
| Snap Inc |
| Continental AG PK |
Snap and Continental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Continental
The main advantage of trading using opposite Snap and Continental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Continental 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 Continental will offset losses from the drop in Continental's long position.The idea behind Snap Inc and Continental AG PK 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.| Continental vs. Compagnie Gnrale des | Continental vs. Bridgestone Corp ADR | Continental vs. Continental Aktiengesellschaft | Continental vs. Douglas Dynamics |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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