Correlation Between Snap and Cartesian Growth
Can any of the company-specific risk be diversified away by investing in both Snap and Cartesian Growth 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 Cartesian Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Cartesian Growth, you can compare the effects of market volatilities on Snap and Cartesian Growth 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 Cartesian Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Cartesian Growth.
Diversification Opportunities for Snap and Cartesian Growth
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Snap and Cartesian is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Cartesian Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cartesian Growth 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 Cartesian Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cartesian Growth has no effect on the direction of Snap i.e., Snap and Cartesian Growth go up and down completely randomly.
Pair Corralation between Snap and Cartesian Growth
Given the investment horizon of 90 days Snap Inc is expected to generate 25.75 times more return on investment than Cartesian Growth. However, Snap is 25.75 times more volatile than Cartesian Growth. It trades about 0.03 of its potential returns per unit of risk. Cartesian Growth is currently generating about 0.17 per unit of risk. If you would invest 945.00 in Snap Inc on August 30, 2024 and sell it today you would earn a total of 216.00 from holding Snap Inc or generate 22.86% 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. Cartesian Growth
Performance |
| Timeline |
| Snap Inc |
| Cartesian Growth |
Snap and Cartesian Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Cartesian Growth
The main advantage of trading using opposite Snap and Cartesian Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Cartesian Growth 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 Cartesian Growth will offset losses from the drop in Cartesian Growth's long position.The idea behind Snap Inc and Cartesian Growth 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.| Cartesian Growth vs. Pyrophyte Acquisition Corp | Cartesian Growth vs. Oak Woods Acquisition | Cartesian Growth vs. Embrace Change Acquisition | Cartesian Growth vs. Bannix Acquisition Corp |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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