Correlation Between Snap and First Citizens
Can any of the company-specific risk be diversified away by investing in both Snap and First Citizens 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 First Citizens into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and First Citizens BancShares, you can compare the effects of market volatilities on Snap and First Citizens 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 First Citizens. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and First Citizens.
Diversification Opportunities for Snap and First Citizens
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Snap and First is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and First Citizens BancShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Citizens BancShares 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 First Citizens. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Citizens BancShares has no effect on the direction of Snap i.e., Snap and First Citizens go up and down completely randomly.
Pair Corralation between Snap and First Citizens
Given the investment horizon of 90 days Snap Inc is expected to under-perform the First Citizens. In addition to that, Snap is 2.1 times more volatile than First Citizens BancShares. It trades about -0.11 of its total potential returns per unit of risk. First Citizens BancShares is currently generating about -0.11 per unit of volatility. If you would invest 2,439 in First Citizens BancShares on August 31, 2024 and sell it today you would lose (88.00) from holding First Citizens BancShares or give up 3.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snap Inc vs. First Citizens BancShares
Performance |
| Timeline |
| Snap Inc |
| First Citizens BancShares |
Snap and First Citizens Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and First Citizens
The main advantage of trading using opposite Snap and First Citizens positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, First Citizens 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 First Citizens will offset losses from the drop in First Citizens' long position.The idea behind Snap Inc and First Citizens BancShares 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.| First Citizens vs. Fifth Third Bancorp | First Citizens vs. Dime Community Bancshares | First Citizens vs. Fifth Third Bancorp | First Citizens vs. Northern Trust |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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