Correlation Between Snap and Grifols SA
Can any of the company-specific risk be diversified away by investing in both Snap and Grifols SA 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 Grifols SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Grifols SA ADR, you can compare the effects of market volatilities on Snap and Grifols SA 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 Grifols SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Grifols SA.
Diversification Opportunities for Snap and Grifols SA
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Snap and Grifols is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Grifols SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grifols SA ADR 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 Grifols SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grifols SA ADR has no effect on the direction of Snap i.e., Snap and Grifols SA go up and down completely randomly.
Pair Corralation between Snap and Grifols SA
Given the investment horizon of 90 days Snap Inc is expected to generate 1.38 times more return on investment than Grifols SA. However, Snap is 1.38 times more volatile than Grifols SA ADR. It trades about 0.1 of its potential returns per unit of risk. Grifols SA ADR is currently generating about 0.06 per unit of risk. If you would invest 1,071 in Snap Inc on August 27, 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 | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snap Inc vs. Grifols SA ADR
Performance |
| Timeline |
| Snap Inc |
| Grifols SA ADR |
Snap and Grifols SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Grifols SA
The main advantage of trading using opposite Snap and Grifols SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Grifols SA 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 Grifols SA will offset losses from the drop in Grifols SA's long position.The idea behind Snap Inc and Grifols SA ADR 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.| Grifols SA vs. Novartis AG ADR | Grifols SA vs. AstraZeneca PLC ADR | Grifols SA vs. GlaxoSmithKline PLC ADR | Grifols SA vs. Roche Holding Ltd |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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