Correlation Between Snap and Green Brick
Can any of the company-specific risk be diversified away by investing in both Snap and Green Brick 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 Green Brick into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Green Brick Partners, you can compare the effects of market volatilities on Snap and Green Brick 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 Green Brick. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Green Brick.
Diversification Opportunities for Snap and Green Brick
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Snap and Green is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Green Brick Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Brick Partners 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 Green Brick. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Brick Partners has no effect on the direction of Snap i.e., Snap and Green Brick go up and down completely randomly.
Pair Corralation between Snap and Green Brick
Given the investment horizon of 90 days Snap is expected to generate 1.55 times less return on investment than Green Brick. In addition to that, Snap is 1.69 times more volatile than Green Brick Partners. It trades about 0.02 of its total potential returns per unit of risk. Green Brick Partners is currently generating about 0.05 per unit of volatility. If you would invest 5,468 in Green Brick Partners on August 28, 2024 and sell it today you would earn a total of 2,007 from holding Green Brick Partners or generate 36.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snap Inc vs. Green Brick Partners
Performance |
| Timeline |
| Snap Inc |
| Green Brick Partners |
Snap and Green Brick Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Green Brick
The main advantage of trading using opposite Snap and Green Brick positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Green Brick 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 Green Brick will offset losses from the drop in Green Brick's long position.The idea behind Snap Inc and Green Brick Partners 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.| Green Brick vs. Taylor Morn Home | Green Brick vs. Century Communities | Green Brick vs. Beazer Homes USA | Green Brick vs. Meritage |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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