Correlation Between Snap and Lion Electric
Can any of the company-specific risk be diversified away by investing in both Snap and Lion Electric 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 Lion Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Lion Electric Corp, you can compare the effects of market volatilities on Snap and Lion Electric 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 Lion Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Lion Electric.
Diversification Opportunities for Snap and Lion Electric
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Snap and Lion is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Lion Electric Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion Electric Corp 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 Lion Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion Electric Corp has no effect on the direction of Snap i.e., Snap and Lion Electric go up and down completely randomly.
Pair Corralation between Snap and Lion Electric
Given the investment horizon of 90 days Snap Inc is expected to generate 0.89 times more return on investment than Lion Electric. However, Snap Inc is 1.13 times less risky than Lion Electric. It trades about 0.02 of its potential returns per unit of risk. Lion Electric Corp is currently generating about -0.13 per unit of risk. If you would invest 1,097 in Snap Inc on August 26, 2024 and sell it today you would earn a total of 45.00 from holding Snap Inc or generate 4.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.4% |
| Values | Daily Returns |
Snap Inc vs. Lion Electric Corp
Performance |
| Timeline |
| Snap Inc |
| Lion Electric Corp |
Snap and Lion Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Lion Electric
The main advantage of trading using opposite Snap and Lion Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Lion Electric 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 Lion Electric will offset losses from the drop in Lion Electric's long position.The idea behind Snap Inc and Lion Electric Corp 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.| Lion Electric vs. Lion Electric Corp | Lion Electric vs. Alimentation Couchen Tard | Lion Electric vs. BRP 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 Stocks Directory module to find actively traded stocks across global markets.
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