Correlation Between Snap and Frost Credit
Can any of the company-specific risk be diversified away by investing in both Snap and Frost Credit 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 Frost Credit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Frost Credit Fund, you can compare the effects of market volatilities on Snap and Frost Credit 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 Frost Credit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Frost Credit.
Diversification Opportunities for Snap and Frost Credit
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Snap and Frost is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Frost Credit Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frost Credit 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 Frost Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frost Credit has no effect on the direction of Snap i.e., Snap and Frost Credit go up and down completely randomly.
Pair Corralation between Snap and Frost Credit
Given the investment horizon of 90 days Snap Inc is expected to generate 21.0 times more return on investment than Frost Credit. However, Snap is 21.0 times more volatile than Frost Credit Fund. It trades about 0.1 of its potential returns per unit of risk. Frost Credit Fund is currently generating about 0.15 per unit of risk. 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 Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snap Inc vs. Frost Credit Fund
Performance |
| Timeline |
| Snap Inc |
| Frost Credit |
Snap and Frost Credit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Frost Credit
The main advantage of trading using opposite Snap and Frost Credit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Frost Credit 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 Frost Credit will offset losses from the drop in Frost Credit's long position.The idea behind Snap Inc and Frost Credit 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.| Frost Credit vs. Frost Growth Equity | Frost Credit vs. Frost Low Duration | Frost Credit vs. Frost Total Return | Frost Credit vs. Frost Total Return |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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