Correlation Between Snap and Highland Small-cap
Can any of the company-specific risk be diversified away by investing in both Snap and Highland Small-cap 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 Highland Small-cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Highland Small Cap Equity, you can compare the effects of market volatilities on Snap and Highland Small-cap 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 Highland Small-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Highland Small-cap.
Diversification Opportunities for Snap and Highland Small-cap
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Snap and Highland is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Highland Small Cap Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highland 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 Highland Small-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highland Small Cap has no effect on the direction of Snap i.e., Snap and Highland Small-cap go up and down completely randomly.
Pair Corralation between Snap and Highland Small-cap
Given the investment horizon of 90 days Snap Inc is expected to under-perform the Highland Small-cap. In addition to that, Snap is 4.25 times more volatile than Highland Small Cap Equity. It trades about -0.03 of its total potential returns per unit of risk. Highland Small Cap Equity is currently generating about 0.32 per unit of volatility. If you would invest 660.00 in Highland Small Cap Equity on September 1, 2024 and sell it today you would earn a total of 34.00 from holding Highland Small Cap Equity or generate 5.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Snap Inc vs. Highland Small Cap Equity
Performance |
| Timeline |
| Snap Inc |
| Highland Small Cap |
Snap and Highland Small-cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Highland Small-cap
The main advantage of trading using opposite Snap and Highland Small-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Highland Small-cap 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 Highland Small-cap will offset losses from the drop in Highland Small-cap's long position.The idea behind Snap Inc and Highland Small Cap Equity 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.| Highland Small-cap vs. Calamos Short Term Bond | Highland Small-cap vs. Multisector Bond Sma | Highland Small-cap vs. Ab Bond Inflation | Highland Small-cap vs. Legg Mason Partners |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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