Correlation Between Snap and Lonza Group
Can any of the company-specific risk be diversified away by investing in both Snap and Lonza Group 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 Lonza Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Lonza Group AG, you can compare the effects of market volatilities on Snap and Lonza Group 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 Lonza Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Lonza Group.
Diversification Opportunities for Snap and Lonza Group
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Snap and Lonza is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Lonza Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lonza Group AG 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 Lonza Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lonza Group AG has no effect on the direction of Snap i.e., Snap and Lonza Group go up and down completely randomly.
Pair Corralation between Snap and Lonza Group
Given the investment horizon of 90 days Snap Inc is expected to under-perform the Lonza Group. In addition to that, Snap is 1.43 times more volatile than Lonza Group AG. It trades about -0.03 of its total potential returns per unit of risk. Lonza Group AG is currently generating about -0.01 per unit of volatility. If you would invest 53,260 in Lonza Group AG on September 1, 2024 and sell it today you would lose (620.00) from holding Lonza Group AG or give up 1.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 91.3% |
| Values | Daily Returns |
Snap Inc vs. Lonza Group AG
Performance |
| Timeline |
| Snap Inc |
| Lonza Group AG |
Snap and Lonza Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Lonza Group
The main advantage of trading using opposite Snap and Lonza Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Lonza Group 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 Lonza Group will offset losses from the drop in Lonza Group's long position.The idea behind Snap Inc and Lonza Group AG 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.| Lonza Group vs. Sika AG | Lonza Group vs. Givaudan SA | Lonza Group vs. Geberit AG | Lonza Group vs. Swiss Life Holding |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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