Correlation Between Snap and American CuMo
Can any of the company-specific risk be diversified away by investing in both Snap and American CuMo 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 American CuMo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and American CuMo Mining, you can compare the effects of market volatilities on Snap and American CuMo 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 American CuMo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and American CuMo.
Diversification Opportunities for Snap and American CuMo
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Snap and American is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and American CuMo Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American CuMo Mining 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 American CuMo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American CuMo Mining has no effect on the direction of Snap i.e., Snap and American CuMo go up and down completely randomly.
Pair Corralation between Snap and American CuMo
Given the investment horizon of 90 days Snap is expected to generate 12.04 times less return on investment than American CuMo. But when comparing it to its historical volatility, Snap Inc is 6.43 times less risky than American CuMo. It trades about 0.04 of its potential returns per unit of risk. American CuMo Mining is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 4.00 in American CuMo Mining on August 26, 2024 and sell it today you would lose (3.00) from holding American CuMo Mining or give up 75.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.49% |
| Values | Daily Returns |
Snap Inc vs. American CuMo Mining
Performance |
| Timeline |
| Snap Inc |
| American CuMo Mining |
Snap and American CuMo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and American CuMo
The main advantage of trading using opposite Snap and American CuMo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, American CuMo 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 American CuMo will offset losses from the drop in American CuMo's long position.The idea behind Snap Inc and American CuMo Mining 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.| American CuMo vs. Ascendant Resources | American CuMo vs. Cantex Mine Development | American CuMo vs. Amarc Resources | American CuMo vs. Sterling Metals Corp |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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