Correlation Between Snap and Great West
Can any of the company-specific risk be diversified away by investing in both Snap and Great West 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 Great West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Great West Lifeco, you can compare the effects of market volatilities on Snap and Great West 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 Great West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Great West.
Diversification Opportunities for Snap and Great West
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Snap and Great is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Great West Lifeco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Lifeco 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 Great West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great West Lifeco has no effect on the direction of Snap i.e., Snap and Great West go up and down completely randomly.
Pair Corralation between Snap and Great West
Given the investment horizon of 90 days Snap Inc is expected to generate 9.62 times more return on investment than Great West. However, Snap is 9.62 times more volatile than Great West Lifeco. It trades about 0.1 of its potential returns per unit of risk. Great West Lifeco is currently generating about -0.24 per unit of risk. If you would invest 1,071 in Snap Inc on August 28, 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snap Inc vs. Great West Lifeco
Performance |
| Timeline |
| Snap Inc |
| Great West Lifeco |
Snap and Great West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Great West
The main advantage of trading using opposite Snap and Great West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Great West 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 Great West will offset losses from the drop in Great West's long position.The idea behind Snap Inc and Great West Lifeco 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.| Great West vs. Perseus Mining | Great West vs. Jamieson Wellness | Great West vs. T2 Metals Corp | Great West vs. Ramp Metals |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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