Correlation Between Snap and Pegasystems
Can any of the company-specific risk be diversified away by investing in both Snap and Pegasystems 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 Pegasystems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Pegasystems, you can compare the effects of market volatilities on Snap and Pegasystems 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 Pegasystems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Pegasystems.
Diversification Opportunities for Snap and Pegasystems
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Snap and Pegasystems is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Pegasystems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pegasystems 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 Pegasystems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pegasystems has no effect on the direction of Snap i.e., Snap and Pegasystems go up and down completely randomly.
Pair Corralation between Snap and Pegasystems
Given the investment horizon of 90 days Snap is expected to generate 2.16 times less return on investment than Pegasystems. In addition to that, Snap is 1.32 times more volatile than Pegasystems. It trades about 0.03 of its total potential returns per unit of risk. Pegasystems is currently generating about 0.08 per unit of volatility. If you would invest 3,537 in Pegasystems on August 25, 2024 and sell it today you would earn a total of 5,615 from holding Pegasystems or generate 158.75% 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. Pegasystems
Performance |
| Timeline |
| Snap Inc |
| Pegasystems |
Snap and Pegasystems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Pegasystems
The main advantage of trading using opposite Snap and Pegasystems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Pegasystems 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 Pegasystems will offset losses from the drop in Pegasystems' long position.The idea behind Snap Inc and Pegasystems 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.| Pegasystems vs. Wex Inc | Pegasystems vs. Cognex | Pegasystems vs. Progress Software | Pegasystems vs. Fair Isaac |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Stocks Directory Find actively traded stocks across global markets |