Correlation Between Snap and Curaleaf Holdings
Can any of the company-specific risk be diversified away by investing in both Snap and Curaleaf Holdings 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 Curaleaf Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Curaleaf Holdings, you can compare the effects of market volatilities on Snap and Curaleaf Holdings 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 Curaleaf Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Curaleaf Holdings.
Diversification Opportunities for Snap and Curaleaf Holdings
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Snap and Curaleaf is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Curaleaf Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Curaleaf Holdings 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 Curaleaf Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Curaleaf Holdings has no effect on the direction of Snap i.e., Snap and Curaleaf Holdings go up and down completely randomly.
Pair Corralation between Snap and Curaleaf Holdings
Given the investment horizon of 90 days Snap Inc is expected to generate 0.75 times more return on investment than Curaleaf Holdings. However, Snap Inc is 1.34 times less risky than Curaleaf Holdings. It trades about 0.02 of its potential returns per unit of risk. Curaleaf Holdings is currently generating about 0.02 per unit of risk. If you would invest 1,124 in Snap Inc on August 24, 2024 and sell it today you would earn a total of 18.00 from holding Snap Inc or generate 1.6% 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. Curaleaf Holdings
Performance |
| Timeline |
| Snap Inc |
| Curaleaf Holdings |
Snap and Curaleaf Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Curaleaf Holdings
The main advantage of trading using opposite Snap and Curaleaf Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Curaleaf Holdings 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 Curaleaf Holdings will offset losses from the drop in Curaleaf Holdings' long position.The idea behind Snap Inc and Curaleaf Holdings 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.| Curaleaf Holdings vs. Green Cures Botanical | Curaleaf Holdings vs. Rimrock Gold Corp | Curaleaf Holdings vs. Galexxy Holdings | Curaleaf Holdings vs. Indoor Harvest Corp |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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