Correlation Between Snap and Horizon Kinetics
Can any of the company-specific risk be diversified away by investing in both Snap and Horizon Kinetics 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 Horizon Kinetics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Horizon Kinetics Medical, you can compare the effects of market volatilities on Snap and Horizon Kinetics 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 Horizon Kinetics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Horizon Kinetics.
Diversification Opportunities for Snap and Horizon Kinetics
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Snap and Horizon is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Horizon Kinetics Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizon Kinetics Medical 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 Horizon Kinetics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horizon Kinetics Medical has no effect on the direction of Snap i.e., Snap and Horizon Kinetics go up and down completely randomly.
Pair Corralation between Snap and Horizon Kinetics
Given the investment horizon of 90 days Snap Inc is expected to generate 4.42 times more return on investment than Horizon Kinetics. However, Snap is 4.42 times more volatile than Horizon Kinetics Medical. It trades about 0.03 of its potential returns per unit of risk. Horizon Kinetics Medical is currently generating about -0.01 per unit of risk. If you would invest 940.00 in Snap Inc on August 29, 2024 and sell it today you would earn a total of 220.00 from holding Snap Inc or generate 23.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 92.93% |
| Values | Daily Returns |
Snap Inc vs. Horizon Kinetics Medical
Performance |
| Timeline |
| Snap Inc |
| Horizon Kinetics Medical |
Snap and Horizon Kinetics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Horizon Kinetics
The main advantage of trading using opposite Snap and Horizon Kinetics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Horizon Kinetics 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 Horizon Kinetics will offset losses from the drop in Horizon Kinetics' long position.The idea behind Snap Inc and Horizon Kinetics Medical 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.| Horizon Kinetics vs. Global X Clean | Horizon Kinetics vs. Global X Renewable | Horizon Kinetics vs. Global X Thematic | Horizon Kinetics vs. Global X AgTech |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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