Correlation Between Snap and Hodges Small
Can any of the company-specific risk be diversified away by investing in both Snap and Hodges Small 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 Hodges Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Hodges Small Cap, you can compare the effects of market volatilities on Snap and Hodges Small 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 Hodges Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Hodges Small.
Diversification Opportunities for Snap and Hodges Small
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Snap and Hodges is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Hodges Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hodges Small Cap 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 Hodges Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hodges Small Cap has no effect on the direction of Snap i.e., Snap and Hodges Small go up and down completely randomly.
Pair Corralation between Snap and Hodges Small
Given the investment horizon of 90 days Snap Inc is expected to generate 2.84 times more return on investment than Hodges Small. However, Snap is 2.84 times more volatile than Hodges Small Cap. It trades about 0.03 of its potential returns per unit of risk. Hodges Small Cap is currently generating about 0.05 per unit of risk. If you would invest 930.00 in Snap Inc on August 28, 2024 and sell it today you would earn a total of 230.00 from holding Snap Inc or generate 24.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snap Inc vs. Hodges Small Cap
Performance |
| Timeline |
| Snap Inc |
| Hodges Small Cap |
Snap and Hodges Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Hodges Small
The main advantage of trading using opposite Snap and Hodges Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Hodges Small 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 Hodges Small will offset losses from the drop in Hodges Small's long position.The idea behind Snap Inc and Hodges Small Cap 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.| Hodges Small vs. Hodges Fund Retail | Hodges Small vs. Amg Southernsun Small | Hodges Small vs. Brown Advisory Growth | Hodges Small vs. Eventide Gilead Fund |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments |