Correlation Between Snap and VanEck Gold
Can any of the company-specific risk be diversified away by investing in both Snap and VanEck Gold 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 VanEck Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and VanEck Gold Miners, you can compare the effects of market volatilities on Snap and VanEck Gold 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 VanEck Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and VanEck Gold.
Diversification Opportunities for Snap and VanEck Gold
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Snap and VanEck is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and VanEck Gold Miners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Gold Miners 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 VanEck Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Gold Miners has no effect on the direction of Snap i.e., Snap and VanEck Gold go up and down completely randomly.
Pair Corralation between Snap and VanEck Gold
Given the investment horizon of 90 days Snap Inc is expected to generate 1.39 times more return on investment than VanEck Gold. However, Snap is 1.39 times more volatile than VanEck Gold Miners. It trades about -0.11 of its potential returns per unit of risk. VanEck Gold Miners is currently generating about -0.2 per unit of risk. If you would invest 1,262 in Snap Inc on August 31, 2024 and sell it today you would lose (101.00) from holding Snap Inc or give up 8.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snap Inc vs. VanEck Gold Miners
Performance |
| Timeline |
| Snap Inc |
| VanEck Gold Miners |
Snap and VanEck Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and VanEck Gold
The main advantage of trading using opposite Snap and VanEck Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, VanEck Gold 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 VanEck Gold will offset losses from the drop in VanEck Gold's long position.The idea behind Snap Inc and VanEck Gold Miners 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.| VanEck Gold vs. VanEck Junior Gold | VanEck Gold vs. iShares Silver Trust | VanEck Gold vs. SPDR Gold Shares | VanEck Gold vs. Newmont Goldcorp Corp |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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