Correlation Between Snap and Retail Food
Can any of the company-specific risk be diversified away by investing in both Snap and Retail Food 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 Retail Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Retail Food Group, you can compare the effects of market volatilities on Snap and Retail Food 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 Retail Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Retail Food.
Diversification Opportunities for Snap and Retail Food
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Snap and Retail is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Retail Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Retail Food Group 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 Retail Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Retail Food Group has no effect on the direction of Snap i.e., Snap and Retail Food go up and down completely randomly.
Pair Corralation between Snap and Retail Food
Given the investment horizon of 90 days Snap is expected to generate 1.08 times less return on investment than Retail Food. In addition to that, Snap is 1.65 times more volatile than Retail Food Group. It trades about 0.1 of its total potential returns per unit of risk. Retail Food Group is currently generating about 0.18 per unit of volatility. If you would invest 6.60 in Retail Food Group on August 29, 2024 and sell it today you would earn a total of 0.70 from holding Retail Food Group or generate 10.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snap Inc vs. Retail Food Group
Performance |
| Timeline |
| Snap Inc |
| Retail Food Group |
Snap and Retail Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Retail Food
The main advantage of trading using opposite Snap and Retail Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Retail Food 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 Retail Food will offset losses from the drop in Retail Food's long position.The idea behind Snap Inc and Retail Food Group 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.| Retail Food vs. Autosports Group | Retail Food vs. AiMedia Technologies | Retail Food vs. BKI Investment | Retail Food vs. ARN Media Limited |
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 Channel module to use Commodity Channel Index to analyze current equity momentum.
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