Correlation Between Snap and Nextdecade Corp
Can any of the company-specific risk be diversified away by investing in both Snap and Nextdecade Corp 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 Nextdecade Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Nextdecade Corp, you can compare the effects of market volatilities on Snap and Nextdecade Corp 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 Nextdecade Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Nextdecade Corp.
Diversification Opportunities for Snap and Nextdecade Corp
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Snap and Nextdecade is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Nextdecade Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextdecade Corp 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 Nextdecade Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextdecade Corp has no effect on the direction of Snap i.e., Snap and Nextdecade Corp go up and down completely randomly.
Pair Corralation between Snap and Nextdecade Corp
Given the investment horizon of 90 days Snap Inc is expected to under-perform the Nextdecade Corp. But the stock apears to be less risky and, when comparing its historical volatility, Snap Inc is 1.51 times less risky than Nextdecade Corp. The stock trades about -0.03 of its potential returns per unit of risk. The Nextdecade Corp is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 584.00 in Nextdecade Corp on September 1, 2024 and sell it today you would earn a total of 140.00 from holding Nextdecade Corp or generate 23.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snap Inc vs. Nextdecade Corp
Performance |
| Timeline |
| Snap Inc |
| Nextdecade Corp |
Snap and Nextdecade Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Nextdecade Corp
The main advantage of trading using opposite Snap and Nextdecade Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Nextdecade Corp 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 Nextdecade Corp will offset losses from the drop in Nextdecade Corp's long position.The idea behind Snap Inc and Nextdecade Corp 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.| Nextdecade Corp vs. EQT Corporation | Nextdecade Corp vs. Coterra Energy | Nextdecade Corp vs. Antero Resources Corp | Nextdecade Corp vs. Evolution Petroleum |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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