Correlation Between Snap and Passage Bio
Can any of the company-specific risk be diversified away by investing in both Snap and Passage Bio 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 Passage Bio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Passage Bio, you can compare the effects of market volatilities on Snap and Passage Bio 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 Passage Bio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Passage Bio.
Diversification Opportunities for Snap and Passage Bio
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Snap and Passage is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Passage Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Passage Bio 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 Passage Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Passage Bio has no effect on the direction of Snap i.e., Snap and Passage Bio go up and down completely randomly.
Pair Corralation between Snap and Passage Bio
Given the investment horizon of 90 days Snap is expected to generate 1.78 times less return on investment than Passage Bio. But when comparing it to its historical volatility, Snap Inc is 1.64 times less risky than Passage Bio. It trades about 0.03 of its potential returns per unit of risk. Passage Bio is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 98.00 in Passage Bio on August 31, 2024 and sell it today you would earn a total of 15.00 from holding Passage Bio or generate 15.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snap Inc vs. Passage Bio
Performance |
| Timeline |
| Snap Inc |
| Passage Bio |
Snap and Passage Bio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Passage Bio
The main advantage of trading using opposite Snap and Passage Bio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Passage Bio 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 Passage Bio will offset losses from the drop in Passage Bio's long position.The idea behind Snap Inc and Passage Bio 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.| Passage Bio vs. Cue Biopharma | Passage Bio vs. Eliem Therapeutics | Passage Bio vs. Inhibrx | Passage Bio vs. Molecular Partners AG |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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