Correlation Between Snap and Jerusalem
Can any of the company-specific risk be diversified away by investing in both Snap and Jerusalem 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 Jerusalem into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Jerusalem, you can compare the effects of market volatilities on Snap and Jerusalem 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 Jerusalem. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Jerusalem.
Diversification Opportunities for Snap and Jerusalem
Very weak diversification
The 3 months correlation between Snap and Jerusalem is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Jerusalem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jerusalem 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 Jerusalem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jerusalem has no effect on the direction of Snap i.e., Snap and Jerusalem go up and down completely randomly.
Pair Corralation between Snap and Jerusalem
Given the investment horizon of 90 days Snap is expected to generate 2.05 times less return on investment than Jerusalem. In addition to that, Snap is 3.46 times more volatile than Jerusalem. It trades about 0.11 of its total potential returns per unit of risk. Jerusalem is currently generating about 0.77 per unit of volatility. If you would invest 126,200 in Jerusalem on August 26, 2024 and sell it today you would earn a total of 23,800 from holding Jerusalem or generate 18.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 77.27% |
| Values | Daily Returns |
Snap Inc vs. Jerusalem
Performance |
| Timeline |
| Snap Inc |
| Jerusalem |
Snap and Jerusalem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Jerusalem
The main advantage of trading using opposite Snap and Jerusalem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Jerusalem 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 Jerusalem will offset losses from the drop in Jerusalem's long position.The idea behind Snap Inc and Jerusalem 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.| Jerusalem vs. Mizrahi Tefahot | Jerusalem vs. First International Bank | Jerusalem vs. Israel Discount Bank | Jerusalem vs. Bank Leumi Le Israel |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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