Correlation Between Snap and IShares Healthcare
Can any of the company-specific risk be diversified away by investing in both Snap and IShares Healthcare 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 IShares Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and iShares Healthcare Providers, you can compare the effects of market volatilities on Snap and IShares Healthcare 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 IShares Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and IShares Healthcare.
Diversification Opportunities for Snap and IShares Healthcare
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Snap and IShares is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and iShares Healthcare Providers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Healthcare 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 IShares Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Healthcare has no effect on the direction of Snap i.e., Snap and IShares Healthcare go up and down completely randomly.
Pair Corralation between Snap and IShares Healthcare
Given the investment horizon of 90 days Snap Inc is expected to under-perform the IShares Healthcare. In addition to that, Snap is 2.46 times more volatile than iShares Healthcare Providers. It trades about -0.03 of its total potential returns per unit of risk. iShares Healthcare Providers is currently generating about 0.18 per unit of volatility. If you would invest 5,199 in iShares Healthcare Providers on September 1, 2024 and sell it today you would earn a total of 241.00 from holding iShares Healthcare Providers or generate 4.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snap Inc vs. iShares Healthcare Providers
Performance |
| Timeline |
| Snap Inc |
| iShares Healthcare |
Snap and IShares Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and IShares Healthcare
The main advantage of trading using opposite Snap and IShares Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, IShares Healthcare 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 IShares Healthcare will offset losses from the drop in IShares Healthcare's long position.The idea behind Snap Inc and iShares Healthcare Providers 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.| IShares Healthcare vs. iShares Pharmaceuticals ETF | IShares Healthcare vs. iShares Medical Devices | IShares Healthcare vs. iShares Healthcare ETF | IShares Healthcare vs. iShares Broker Dealers Securities |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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