Correlation Between Snap and Holmen AB
Can any of the company-specific risk be diversified away by investing in both Snap and Holmen AB 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 Holmen AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Holmen AB, you can compare the effects of market volatilities on Snap and Holmen AB 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 Holmen AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Holmen AB.
Diversification Opportunities for Snap and Holmen AB
Good diversification
The 3 months correlation between Snap and Holmen is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Holmen AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holmen AB 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 Holmen AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holmen AB has no effect on the direction of Snap i.e., Snap and Holmen AB go up and down completely randomly.
Pair Corralation between Snap and Holmen AB
Given the investment horizon of 90 days Snap Inc is expected to under-perform the Holmen AB. In addition to that, Snap is 3.15 times more volatile than Holmen AB. It trades about -0.08 of its total potential returns per unit of risk. Holmen AB is currently generating about -0.1 per unit of volatility. If you would invest 42,060 in Holmen AB on August 31, 2024 and sell it today you would lose (980.00) from holding Holmen AB or give up 2.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snap Inc vs. Holmen AB
Performance |
| Timeline |
| Snap Inc |
| Holmen AB |
Snap and Holmen AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Holmen AB
The main advantage of trading using opposite Snap and Holmen AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Holmen AB 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 Holmen AB will offset losses from the drop in Holmen AB's long position.The idea behind Snap Inc and Holmen AB 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.| Holmen AB vs. Svenska Cellulosa Aktiebolaget | Holmen AB vs. BillerudKorsnas AB | Holmen AB vs. Boliden AB | Holmen AB vs. Husqvarna AB |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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