Correlation Between Snap and High Yield
Can any of the company-specific risk be diversified away by investing in both Snap and High Yield 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 High Yield into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and High Yield Fund, you can compare the effects of market volatilities on Snap and High Yield 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 High Yield. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and High Yield.
Diversification Opportunities for Snap and High Yield
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Snap and High is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and High Yield Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Yield Fund 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 High Yield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Yield Fund has no effect on the direction of Snap i.e., Snap and High Yield go up and down completely randomly.
Pair Corralation between Snap and High Yield
Given the investment horizon of 90 days Snap Inc is expected to generate 21.32 times more return on investment than High Yield. However, Snap is 21.32 times more volatile than High Yield Fund. It trades about 0.03 of its potential returns per unit of risk. High Yield Fund is currently generating about 0.15 per unit of risk. If you would invest 1,111 in Snap Inc on September 3, 2024 and sell it today you would earn a total of 70.00 from holding Snap Inc or generate 6.3% 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. High Yield Fund
Performance |
| Timeline |
| Snap Inc |
| High Yield Fund |
Snap and High Yield Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and High Yield
The main advantage of trading using opposite Snap and High Yield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, High Yield 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 High Yield will offset losses from the drop in High Yield's long position.The idea behind Snap Inc and High Yield 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.| High Yield vs. Baird Smallmid Cap | High Yield vs. The Hartford Small | High Yield vs. Touchstone Small Cap | High Yield vs. Ab Small 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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