Correlation Between Snap and Paradigm Select
Can any of the company-specific risk be diversified away by investing in both Snap and Paradigm Select 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 Paradigm Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Paradigm Select Fund, you can compare the effects of market volatilities on Snap and Paradigm Select 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 Paradigm Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Paradigm Select.
Diversification Opportunities for Snap and Paradigm Select
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Snap and Paradigm is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Paradigm Select Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paradigm Select 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 Paradigm Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paradigm Select has no effect on the direction of Snap i.e., Snap and Paradigm Select go up and down completely randomly.
Pair Corralation between Snap and Paradigm Select
Given the investment horizon of 90 days Snap Inc is expected to generate 3.44 times more return on investment than Paradigm Select. However, Snap is 3.44 times more volatile than Paradigm Select Fund. It trades about 0.06 of its potential returns per unit of risk. Paradigm Select Fund is currently generating about 0.09 per unit of risk. If you would invest 1,057 in Snap Inc on August 25, 2024 and sell it today you would earn a total of 85.00 from holding Snap Inc or generate 8.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snap Inc vs. Paradigm Select Fund
Performance |
| Timeline |
| Snap Inc |
| Paradigm Select |
Snap and Paradigm Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Paradigm Select
The main advantage of trading using opposite Snap and Paradigm Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Paradigm Select 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 Paradigm Select will offset losses from the drop in Paradigm Select's long position.The idea behind Snap Inc and Paradigm Select Fund 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.| Paradigm Select vs. Paradigm Micro Cap Fund | Paradigm Select vs. Paradigm Value Fund | Paradigm Select vs. Needham Small Cap | Paradigm Select vs. Touchstone Mid Cap |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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