Correlation Between Snap and Emerging Europe
Can any of the company-specific risk be diversified away by investing in both Snap and Emerging Europe 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 Emerging Europe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Emerging Europe Fund, you can compare the effects of market volatilities on Snap and Emerging Europe 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 Emerging Europe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Emerging Europe.
Diversification Opportunities for Snap and Emerging Europe
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Snap and Emerging is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Emerging Europe Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Europe 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 Emerging Europe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Europe has no effect on the direction of Snap i.e., Snap and Emerging Europe go up and down completely randomly.
Pair Corralation between Snap and Emerging Europe
If you would invest 1,045 in Snap Inc on August 26, 2024 and sell it today you would earn a total of 97.00 from holding Snap Inc or generate 9.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 4.55% |
| Values | Daily Returns |
Snap Inc vs. Emerging Europe Fund
Performance |
| Timeline |
| Snap Inc |
| Emerging Europe |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Snap and Emerging Europe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Emerging Europe
The main advantage of trading using opposite Snap and Emerging Europe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Emerging Europe 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 Emerging Europe will offset losses from the drop in Emerging Europe's long position.The idea behind Snap Inc and Emerging Europe Fund 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.| Emerging Europe vs. Franklin High Yield | Emerging Europe vs. Alliancebernstein National Municipal | Emerging Europe vs. T Rowe Price | Emerging Europe vs. Multisector Bond Sma |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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