Correlation Between Snap and Nordstrom
Can any of the company-specific risk be diversified away by investing in both Snap and Nordstrom 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 Nordstrom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Nordstrom, you can compare the effects of market volatilities on Snap and Nordstrom 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 Nordstrom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Nordstrom.
Diversification Opportunities for Snap and Nordstrom
Modest diversification
The 3 months correlation between Snap and Nordstrom is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Nordstrom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordstrom 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 Nordstrom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordstrom has no effect on the direction of Snap i.e., Snap and Nordstrom go up and down completely randomly.
Pair Corralation between Snap and Nordstrom
Given the investment horizon of 90 days Snap Inc is expected to generate 0.97 times more return on investment than Nordstrom. However, Snap Inc is 1.04 times less risky than Nordstrom. It trades about 0.11 of its potential returns per unit of risk. Nordstrom is currently generating about 0.07 per unit of risk. If you would invest 1,055 in Snap Inc on September 19, 2024 and sell it today you would earn a total of 67.00 from holding Snap Inc or generate 6.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snap Inc vs. Nordstrom
Performance |
| Timeline |
| Snap Inc |
| Nordstrom |
Snap and Nordstrom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Nordstrom
The main advantage of trading using opposite Snap and Nordstrom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Nordstrom 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 Nordstrom will offset losses from the drop in Nordstrom's long position.The idea behind Snap Inc and Nordstrom 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.| Nordstrom vs. Twilio Inc | Nordstrom vs. Getty Images Holdings | Nordstrom vs. Baidu Inc | Nordstrom vs. Snap Inc |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Commodity Directory Find actively traded commodities issued by global exchanges |