Correlation Between Snap and Emmi AG
Can any of the company-specific risk be diversified away by investing in both Snap and Emmi AG 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 Emmi AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Emmi AG, you can compare the effects of market volatilities on Snap and Emmi AG 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 Emmi AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Emmi AG.
Diversification Opportunities for Snap and Emmi AG
Excellent diversification
The 3 months correlation between Snap and Emmi is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Emmi AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emmi AG 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 Emmi AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emmi AG has no effect on the direction of Snap i.e., Snap and Emmi AG go up and down completely randomly.
Pair Corralation between Snap and Emmi AG
If you would invest 1,071 in Snap Inc on August 29, 2024 and sell it today you would earn a total of 89.00 from holding Snap Inc or generate 8.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snap Inc vs. Emmi AG
Performance |
| Timeline |
| Snap Inc |
| Emmi AG |
Snap and Emmi AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Emmi AG
The main advantage of trading using opposite Snap and Emmi AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Emmi AG 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 Emmi AG will offset losses from the drop in Emmi AG's long position.The idea behind Snap Inc and Emmi AG 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.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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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