Correlation Between Snap and Key Energy
Can any of the company-specific risk be diversified away by investing in both Snap and Key Energy 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 Key Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Key Energy Services, you can compare the effects of market volatilities on Snap and Key Energy 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 Key Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Key Energy.
Diversification Opportunities for Snap and Key Energy
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Snap and Key is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Key Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Key Energy Services 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 Key Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Key Energy Services has no effect on the direction of Snap i.e., Snap and Key Energy go up and down completely randomly.
Pair Corralation between Snap and Key Energy
If you would invest 1,207 in Snap Inc on August 27, 2024 and sell it today you would lose (65.00) from holding Snap Inc or give up 5.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 0.66% |
| Values | Daily Returns |
Snap Inc vs. Key Energy Services
Performance |
| Timeline |
| Snap Inc |
| Key Energy Services |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Snap and Key Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Key Energy
The main advantage of trading using opposite Snap and Key Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Key Energy 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 Key Energy will offset losses from the drop in Key Energy's long position.The idea behind Snap Inc and Key Energy Services 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.| Key Energy vs. Archrock | Key Energy vs. Newpark Resources | Key Energy vs. Bristow Group | Key Energy vs. TechnipFMC PLC |
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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