Correlation Between Snap and Rock Oak
Can any of the company-specific risk be diversified away by investing in both Snap and Rock Oak 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 Rock Oak into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Rock Oak E, you can compare the effects of market volatilities on Snap and Rock Oak 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 Rock Oak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Rock Oak.
Diversification Opportunities for Snap and Rock Oak
Poor diversification
The 3 months correlation between Snap and Rock is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Rock Oak E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rock Oak E 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 Rock Oak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rock Oak E has no effect on the direction of Snap i.e., Snap and Rock Oak go up and down completely randomly.
Pair Corralation between Snap and Rock Oak
Given the investment horizon of 90 days Snap Inc is expected to generate 4.52 times more return on investment than Rock Oak. However, Snap is 4.52 times more volatile than Rock Oak E. It trades about 0.1 of its potential returns per unit of risk. Rock Oak E is currently generating about 0.36 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. Rock Oak E
Performance |
| Timeline |
| Snap Inc |
| Rock Oak E |
Snap and Rock Oak Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Rock Oak
The main advantage of trading using opposite Snap and Rock Oak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Rock Oak 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 Rock Oak will offset losses from the drop in Rock Oak's long position.The idea behind Snap Inc and Rock Oak E 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.| Rock Oak vs. Live Oak Health | Rock Oak vs. River Oak Discovery | Rock Oak vs. Black Oak Emerging | Rock Oak vs. Pin Oak Equity |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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