Correlation Between Snap and Kornit Digital
Can any of the company-specific risk be diversified away by investing in both Snap and Kornit Digital 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 Kornit Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Kornit Digital, you can compare the effects of market volatilities on Snap and Kornit Digital 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 Kornit Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Kornit Digital.
Diversification Opportunities for Snap and Kornit Digital
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Snap and Kornit is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Kornit Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kornit Digital 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 Kornit Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kornit Digital has no effect on the direction of Snap i.e., Snap and Kornit Digital go up and down completely randomly.
Pair Corralation between Snap and Kornit Digital
Given the investment horizon of 90 days Snap Inc is expected to under-perform the Kornit Digital. But the stock apears to be less risky and, when comparing its historical volatility, Snap Inc is 1.62 times less risky than Kornit Digital. The stock trades about -0.11 of its potential returns per unit of risk. The Kornit Digital is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 2,363 in Kornit Digital on August 31, 2024 and sell it today you would earn a total of 773.00 from holding Kornit Digital or generate 32.71% 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. Kornit Digital
Performance |
| Timeline |
| Snap Inc |
| Kornit Digital |
Snap and Kornit Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Kornit Digital
The main advantage of trading using opposite Snap and Kornit Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Kornit Digital 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 Kornit Digital will offset losses from the drop in Kornit Digital's long position.The idea behind Snap Inc and Kornit Digital 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.| Kornit Digital vs. Flowserve | Kornit Digital vs. Franklin Electric Co | Kornit Digital vs. Watts Water Technologies | Kornit Digital vs. Gorman Rupp |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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