Correlation Between Snap and IQ Merger
Can any of the company-specific risk be diversified away by investing in both Snap and IQ Merger 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 IQ Merger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and IQ Merger Arbitrage, you can compare the effects of market volatilities on Snap and IQ Merger 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 IQ Merger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and IQ Merger.
Diversification Opportunities for Snap and IQ Merger
Weak diversification
The 3 months correlation between Snap and MNA is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and IQ Merger Arbitrage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IQ Merger Arbitrage 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 IQ Merger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IQ Merger Arbitrage has no effect on the direction of Snap i.e., Snap and IQ Merger go up and down completely randomly.
Pair Corralation between Snap and IQ Merger
Given the investment horizon of 90 days Snap Inc is expected to generate 13.29 times more return on investment than IQ Merger. However, Snap is 13.29 times more volatile than IQ Merger Arbitrage. It trades about 0.03 of its potential returns per unit of risk. IQ Merger Arbitrage is currently generating about 0.03 per unit of risk. If you would invest 922.00 in Snap Inc on August 28, 2024 and sell it today you would earn a total of 238.00 from holding Snap Inc or generate 25.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snap Inc vs. IQ Merger Arbitrage
Performance |
| Timeline |
| Snap Inc |
| IQ Merger Arbitrage |
Snap and IQ Merger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and IQ Merger
The main advantage of trading using opposite Snap and IQ Merger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, IQ Merger 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 IQ Merger will offset losses from the drop in IQ Merger's long position.The idea behind Snap Inc and IQ Merger Arbitrage 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.| IQ Merger vs. IQ Hedge Multi Strategy | IQ Merger vs. ProShares Merger ETF | IQ Merger vs. AGFiQ Market Neutral |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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