Correlation Between Snap and EA Series
Can any of the company-specific risk be diversified away by investing in both Snap and EA Series 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 EA Series into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and EA Series Trust, you can compare the effects of market volatilities on Snap and EA Series 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 EA Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and EA Series.
Diversification Opportunities for Snap and EA Series
Modest diversification
The 3 months correlation between Snap and DTAN is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and EA Series Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EA Series Trust 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 EA Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EA Series Trust has no effect on the direction of Snap i.e., Snap and EA Series go up and down completely randomly.
Pair Corralation between Snap and EA Series
Given the investment horizon of 90 days Snap is expected to generate 35.36 times less return on investment than EA Series. But when comparing it to its historical volatility, Snap Inc is 40.4 times less risky than EA Series. It trades about 0.15 of its potential returns per unit of risk. EA Series Trust is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 0.00 in EA Series Trust on August 31, 2024 and sell it today you would earn a total of 2,471 from holding EA Series Trust or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 93.65% |
| Values | Daily Returns |
Snap Inc vs. EA Series Trust
Performance |
| Timeline |
| Snap Inc |
| EA Series Trust |
Snap and EA Series Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and EA Series
The main advantage of trading using opposite Snap and EA Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, EA Series 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 EA Series will offset losses from the drop in EA Series' long position.The idea behind Snap Inc and EA Series Trust 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.| EA Series vs. FT Vest Equity | EA Series vs. Zillow Group Class | EA Series vs. Northern Lights | EA Series vs. VanEck Vectors Moodys |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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