Correlation Between Snap and MPC Container
Can any of the company-specific risk be diversified away by investing in both Snap and MPC Container 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 MPC Container into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and MPC Container Ships, you can compare the effects of market volatilities on Snap and MPC Container 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 MPC Container. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and MPC Container.
Diversification Opportunities for Snap and MPC Container
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Snap and MPC is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and MPC Container Ships in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MPC Container Ships 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 MPC Container. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MPC Container Ships has no effect on the direction of Snap i.e., Snap and MPC Container go up and down completely randomly.
Pair Corralation between Snap and MPC Container
Given the investment horizon of 90 days Snap Inc is expected to generate 1.24 times more return on investment than MPC Container. However, Snap is 1.24 times more volatile than MPC Container Ships. It trades about 0.1 of its potential returns per unit of risk. MPC Container Ships is currently generating about 0.01 per unit of risk. If you would invest 1,071 in Snap Inc on August 29, 2024 and sell it today you would earn a total of 89.00 from holding Snap Inc or generate 8.31% 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. MPC Container Ships
Performance |
| Timeline |
| Snap Inc |
| MPC Container Ships |
Snap and MPC Container Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and MPC Container
The main advantage of trading using opposite Snap and MPC Container positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, MPC Container 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 MPC Container will offset losses from the drop in MPC Container's long position.The idea behind Snap Inc and MPC Container Ships 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.| MPC Container vs. Shelf Drilling | MPC Container vs. Solstad Offsho | MPC Container vs. Eidesvik Offshore ASA | MPC Container vs. Elkem ASA |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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