Correlation Between Snap and Nanosonics
Can any of the company-specific risk be diversified away by investing in both Snap and Nanosonics 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 Nanosonics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Nanosonics, you can compare the effects of market volatilities on Snap and Nanosonics 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 Nanosonics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Nanosonics.
Diversification Opportunities for Snap and Nanosonics
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Snap and Nanosonics is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Nanosonics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nanosonics 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 Nanosonics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nanosonics has no effect on the direction of Snap i.e., Snap and Nanosonics go up and down completely randomly.
Pair Corralation between Snap and Nanosonics
Given the investment horizon of 90 days Snap is expected to generate 4.25 times less return on investment than Nanosonics. In addition to that, Snap is 1.22 times more volatile than Nanosonics. It trades about 0.01 of its total potential returns per unit of risk. Nanosonics is currently generating about 0.07 per unit of volatility. If you would invest 332.00 in Nanosonics on November 18, 2024 and sell it today you would earn a total of 10.00 from holding Nanosonics or generate 3.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snap Inc vs. Nanosonics
Performance |
| Timeline |
| Snap Inc |
| Nanosonics |
Snap and Nanosonics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Nanosonics
The main advantage of trading using opposite Snap and Nanosonics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Nanosonics 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 Nanosonics will offset losses from the drop in Nanosonics' long position.The idea behind Snap Inc and Nanosonics 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.| Nanosonics vs. Ecofibre | Nanosonics vs. Australian Dairy Farms | Nanosonics vs. Adriatic Metals Plc | Nanosonics vs. Australian Agricultural |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |