Correlation Between Snap and EOG Resources
Can any of the company-specific risk be diversified away by investing in both Snap and EOG Resources 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 EOG Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and EOG Resources, you can compare the effects of market volatilities on Snap and EOG Resources 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 EOG Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and EOG Resources.
Diversification Opportunities for Snap and EOG Resources
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Snap and EOG is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and EOG Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EOG Resources 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 EOG Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EOG Resources has no effect on the direction of Snap i.e., Snap and EOG Resources go up and down completely randomly.
Pair Corralation between Snap and EOG Resources
Given the investment horizon of 90 days Snap Inc is expected to generate 2.23 times more return on investment than EOG Resources. However, Snap is 2.23 times more volatile than EOG Resources. It trades about 0.03 of its potential returns per unit of risk. EOG Resources is currently generating about 0.03 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 Together |
| Strength | Weak |
| Accuracy | 98.22% |
| Values | Daily Returns |
Snap Inc vs. EOG Resources
Performance |
| Timeline |
| Snap Inc |
| EOG Resources |
Snap and EOG Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and EOG Resources
The main advantage of trading using opposite Snap and EOG Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, EOG Resources 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 EOG Resources will offset losses from the drop in EOG Resources' long position.The idea behind Snap Inc and EOG Resources 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.| EOG Resources vs. Alibaba Group Holding | EOG Resources vs. WOODSIDE ENE SPADR | EOG Resources vs. Woodside Energy Group |
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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity |