Correlation Between Snap and Federated Mdt
Can any of the company-specific risk be diversified away by investing in both Snap and Federated Mdt 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 Federated Mdt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Federated Mdt Balanced, you can compare the effects of market volatilities on Snap and Federated Mdt 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 Federated Mdt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Federated Mdt.
Diversification Opportunities for Snap and Federated Mdt
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Snap and Federated is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Federated Mdt Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Mdt Balanced 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 Federated Mdt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Mdt Balanced has no effect on the direction of Snap i.e., Snap and Federated Mdt go up and down completely randomly.
Pair Corralation between Snap and Federated Mdt
Given the investment horizon of 90 days Snap Inc is expected to generate 8.34 times more return on investment than Federated Mdt. However, Snap is 8.34 times more volatile than Federated Mdt Balanced. It trades about 0.1 of its potential returns per unit of risk. Federated Mdt Balanced is currently generating about 0.23 per unit of risk. 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 | 100.0% |
| Values | Daily Returns |
Snap Inc vs. Federated Mdt Balanced
Performance |
| Timeline |
| Snap Inc |
| Federated Mdt Balanced |
Snap and Federated Mdt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Federated Mdt
The main advantage of trading using opposite Snap and Federated Mdt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Federated Mdt 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 Federated Mdt will offset losses from the drop in Federated Mdt's long position.The idea behind Snap Inc and Federated Mdt Balanced 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.| Federated Mdt vs. Federated Emerging Market | Federated Mdt vs. Federated Mdt All | Federated Mdt vs. Federated Global Allocation | Federated Mdt vs. Federated Hermes Emerging |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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