Correlation Between Snap and Caixa Seguridade
Can any of the company-specific risk be diversified away by investing in both Snap and Caixa Seguridade 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 Caixa Seguridade into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Caixa Seguridade Participaes, you can compare the effects of market volatilities on Snap and Caixa Seguridade 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 Caixa Seguridade. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Caixa Seguridade.
Diversification Opportunities for Snap and Caixa Seguridade
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Snap and Caixa is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Caixa Seguridade Participaes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caixa Seguridade Par 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 Caixa Seguridade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caixa Seguridade Par has no effect on the direction of Snap i.e., Snap and Caixa Seguridade go up and down completely randomly.
Pair Corralation between Snap and Caixa Seguridade
Given the investment horizon of 90 days Snap Inc is expected to generate 2.6 times more return on investment than Caixa Seguridade. However, Snap is 2.6 times more volatile than Caixa Seguridade Participaes. It trades about 0.04 of its potential returns per unit of risk. Caixa Seguridade Participaes is currently generating about 0.1 per unit of risk. If you would invest 842.00 in Snap Inc on August 29, 2024 and sell it today you would earn a total of 318.00 from holding Snap Inc or generate 37.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.24% |
| Values | Daily Returns |
Snap Inc vs. Caixa Seguridade Participaes
Performance |
| Timeline |
| Snap Inc |
| Caixa Seguridade Par |
Snap and Caixa Seguridade Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Caixa Seguridade
The main advantage of trading using opposite Snap and Caixa Seguridade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Caixa Seguridade 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 Caixa Seguridade will offset losses from the drop in Caixa Seguridade's long position.The idea behind Snap Inc and Caixa Seguridade Participaes 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.| Caixa Seguridade vs. Porto Seguro SA | Caixa Seguridade vs. Energisa SA | Caixa Seguridade vs. BTG Pactual Logstica | Caixa Seguridade vs. Plano Plano Desenvolvimento |
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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