Correlation Between Snap and GulfSlope Energy
Can any of the company-specific risk be diversified away by investing in both Snap and GulfSlope Energy 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 GulfSlope Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and GulfSlope Energy, you can compare the effects of market volatilities on Snap and GulfSlope Energy 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 GulfSlope Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and GulfSlope Energy.
Diversification Opportunities for Snap and GulfSlope Energy
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Snap and GulfSlope is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and GulfSlope Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GulfSlope Energy 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 GulfSlope Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GulfSlope Energy has no effect on the direction of Snap i.e., Snap and GulfSlope Energy go up and down completely randomly.
Pair Corralation between Snap and GulfSlope Energy
Given the investment horizon of 90 days Snap is expected to generate 17.23 times less return on investment than GulfSlope Energy. But when comparing it to its historical volatility, Snap Inc is 11.93 times less risky than GulfSlope Energy. It trades about 0.03 of its potential returns per unit of risk. GulfSlope Energy is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 0.30 in GulfSlope Energy on August 31, 2024 and sell it today you would lose (0.29) from holding GulfSlope Energy or give up 96.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snap Inc vs. GulfSlope Energy
Performance |
| Timeline |
| Snap Inc |
| GulfSlope Energy |
Snap and GulfSlope Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and GulfSlope Energy
The main advantage of trading using opposite Snap and GulfSlope Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, GulfSlope Energy 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 GulfSlope Energy will offset losses from the drop in GulfSlope Energy's long position.The idea behind Snap Inc and GulfSlope Energy 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.| GulfSlope Energy vs. PEDEVCO Corp | GulfSlope Energy vs. Ring Energy | GulfSlope Energy vs. Occidental Petroleum | GulfSlope Energy vs. Foothills Exploration |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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