Correlation Between Snap and Nepa AB
Can any of the company-specific risk be diversified away by investing in both Snap and Nepa AB 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 Nepa AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Nepa AB, you can compare the effects of market volatilities on Snap and Nepa AB 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 Nepa AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Nepa AB.
Diversification Opportunities for Snap and Nepa AB
Pay attention - limited upside
The 3 months correlation between Snap and Nepa is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Nepa AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nepa AB 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 Nepa AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nepa AB has no effect on the direction of Snap i.e., Snap and Nepa AB go up and down completely randomly.
Pair Corralation between Snap and Nepa AB
Given the investment horizon of 90 days Snap Inc is expected to generate 1.35 times more return on investment than Nepa AB. However, Snap is 1.35 times more volatile than Nepa AB. It trades about -0.01 of its potential returns per unit of risk. Nepa AB is currently generating about -0.03 per unit of risk. If you would invest 1,693 in Snap Inc on August 25, 2024 and sell it today you would lose (551.00) from holding Snap Inc or give up 32.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.57% |
| Values | Daily Returns |
Snap Inc vs. Nepa AB
Performance |
| Timeline |
| Snap Inc |
| Nepa AB |
Snap and Nepa AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Nepa AB
The main advantage of trading using opposite Snap and Nepa AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Nepa AB 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 Nepa AB will offset losses from the drop in Nepa AB's long position.The idea behind Snap Inc and Nepa AB 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.| Nepa AB vs. MAG Interactive AB | Nepa AB vs. Kambi Group PLC | Nepa AB vs. Hexatronic Group AB | Nepa AB vs. Integrum AB Series |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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