Correlation Between Snap and Salient Select
Can any of the company-specific risk be diversified away by investing in both Snap and Salient Select 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 Salient Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Salient Select Income, you can compare the effects of market volatilities on Snap and Salient Select 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 Salient Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Salient Select.
Diversification Opportunities for Snap and Salient Select
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Snap and Salient is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Salient Select Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salient Select Income 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 Salient Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salient Select Income has no effect on the direction of Snap i.e., Snap and Salient Select go up and down completely randomly.
Pair Corralation between Snap and Salient Select
Given the investment horizon of 90 days Snap is expected to generate 2.31 times less return on investment than Salient Select. In addition to that, Snap is 9.53 times more volatile than Salient Select Income. It trades about 0.01 of its total potential returns per unit of risk. Salient Select Income is currently generating about 0.14 per unit of volatility. If you would invest 1,678 in Salient Select Income on August 26, 2024 and sell it today you would earn a total of 276.00 from holding Salient Select Income or generate 16.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snap Inc vs. Salient Select Income
Performance |
| Timeline |
| Snap Inc |
| Salient Select Income |
Snap and Salient Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Salient Select
The main advantage of trading using opposite Snap and Salient Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Salient Select 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 Salient Select will offset losses from the drop in Salient Select's long position.The idea behind Snap Inc and Salient Select Income 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.| Salient Select vs. Salient Tactical Plus | Salient Select vs. Salient Tactical Plus | Salient Select vs. Salient Tactical Plus | Salient Select vs. Salient Tactical Plus |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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