Correlation Between Snap and NovaBay Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Snap and NovaBay Pharmaceuticals 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 NovaBay Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and NovaBay Pharmaceuticals, you can compare the effects of market volatilities on Snap and NovaBay Pharmaceuticals 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 NovaBay Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and NovaBay Pharmaceuticals.
Diversification Opportunities for Snap and NovaBay Pharmaceuticals
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Snap and NovaBay is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and NovaBay Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NovaBay Pharmaceuticals 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 NovaBay Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NovaBay Pharmaceuticals has no effect on the direction of Snap i.e., Snap and NovaBay Pharmaceuticals go up and down completely randomly.
Pair Corralation between Snap and NovaBay Pharmaceuticals
Given the investment horizon of 90 days Snap is expected to generate 1.41 times less return on investment than NovaBay Pharmaceuticals. But when comparing it to its historical volatility, Snap Inc is 1.42 times less risky than NovaBay Pharmaceuticals. It trades about 0.1 of its potential returns per unit of risk. NovaBay Pharmaceuticals is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 55.00 in NovaBay Pharmaceuticals on August 29, 2024 and sell it today you would earn a total of 6.00 from holding NovaBay Pharmaceuticals or generate 10.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Snap Inc vs. NovaBay Pharmaceuticals
Performance |
| Timeline |
| Snap Inc |
| NovaBay Pharmaceuticals |
Snap and NovaBay Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and NovaBay Pharmaceuticals
The main advantage of trading using opposite Snap and NovaBay Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, NovaBay Pharmaceuticals 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 NovaBay Pharmaceuticals will offset losses from the drop in NovaBay Pharmaceuticals' long position.The idea behind Snap Inc and NovaBay Pharmaceuticals 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.| NovaBay Pharmaceuticals vs. Immix Biopharma | NovaBay Pharmaceuticals vs. Cns Pharmaceuticals | NovaBay Pharmaceuticals vs. Sonnet Biotherapeutics Holdings | NovaBay Pharmaceuticals vs. ZyVersa Therapeutics |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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