Correlation Between Snap and OFX Group
Can any of the company-specific risk be diversified away by investing in both Snap and OFX Group 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 OFX Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and OFX Group Ltd, you can compare the effects of market volatilities on Snap and OFX Group 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 OFX Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and OFX Group.
Diversification Opportunities for Snap and OFX Group
Poor diversification
The 3 months correlation between Snap and OFX is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and OFX Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OFX Group 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 OFX Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OFX Group has no effect on the direction of Snap i.e., Snap and OFX Group go up and down completely randomly.
Pair Corralation between Snap and OFX Group
If you would invest 1,071 in Snap Inc on August 28, 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 | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Snap Inc vs. OFX Group Ltd
Performance |
| Timeline |
| Snap Inc |
| OFX Group |
Snap and OFX Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and OFX Group
The main advantage of trading using opposite Snap and OFX Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, OFX Group 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 OFX Group will offset losses from the drop in OFX Group's long position.The idea behind Snap Inc and OFX Group Ltd 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.| OFX Group vs. Bel Fuse A | OFX Group vs. Nextplat Corp | OFX Group vs. Semtech | OFX Group vs. Nextnav Acquisition Corp |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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