Correlation Between Snap and IA Clarington
Can any of the company-specific risk be diversified away by investing in both Snap and IA Clarington 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 IA Clarington into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and IA Clarington Loomis, you can compare the effects of market volatilities on Snap and IA Clarington 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 IA Clarington. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and IA Clarington.
Diversification Opportunities for Snap and IA Clarington
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Snap and IGAF is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and IA Clarington Loomis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IA Clarington Loomis 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 IA Clarington. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IA Clarington Loomis has no effect on the direction of Snap i.e., Snap and IA Clarington go up and down completely randomly.
Pair Corralation between Snap and IA Clarington
Given the investment horizon of 90 days Snap Inc is expected to under-perform the IA Clarington. In addition to that, Snap is 3.35 times more volatile than IA Clarington Loomis. It trades about -0.03 of its total potential returns per unit of risk. IA Clarington Loomis is currently generating about 0.17 per unit of volatility. If you would invest 1,503 in IA Clarington Loomis on September 1, 2024 and sell it today you would earn a total of 53.00 from holding IA Clarington Loomis or generate 3.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 91.3% |
| Values | Daily Returns |
Snap Inc vs. IA Clarington Loomis
Performance |
| Timeline |
| Snap Inc |
| IA Clarington Loomis |
Snap and IA Clarington Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and IA Clarington
The main advantage of trading using opposite Snap and IA Clarington positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, IA Clarington 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 IA Clarington will offset losses from the drop in IA Clarington's long position.The idea behind Snap Inc and IA Clarington Loomis 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.| IA Clarington vs. Forstrong Global Income | IA Clarington vs. iShares Canadian HYBrid | IA Clarington vs. Brompton European Dividend | IA Clarington vs. Solar Alliance Energy |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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