Correlation Between Snap and Roche Holding
Can any of the company-specific risk be diversified away by investing in both Snap and Roche Holding 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 Roche Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Roche Holding AG, you can compare the effects of market volatilities on Snap and Roche Holding 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 Roche Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Roche Holding.
Diversification Opportunities for Snap and Roche Holding
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Snap and Roche is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Roche Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roche Holding AG 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 Roche Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roche Holding AG has no effect on the direction of Snap i.e., Snap and Roche Holding go up and down completely randomly.
Pair Corralation between Snap and Roche Holding
Given the investment horizon of 90 days Snap Inc is expected to generate 4.33 times more return on investment than Roche Holding. However, Snap is 4.33 times more volatile than Roche Holding AG. It trades about 0.09 of its potential returns per unit of risk. Roche Holding AG is currently generating about -0.38 per unit of risk. If you would invest 1,071 in Snap Inc on August 27, 2024 and sell it today you would earn a total of 71.00 from holding Snap Inc or generate 6.63% 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. Roche Holding AG
Performance |
| Timeline |
| Snap Inc |
| Roche Holding AG |
Snap and Roche Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Roche Holding
The main advantage of trading using opposite Snap and Roche Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Roche Holding 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 Roche Holding will offset losses from the drop in Roche Holding's long position.The idea behind Snap Inc and Roche Holding AG 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.| Roche Holding vs. Nestl SA | Roche Holding vs. Zurich Insurance Group | Roche Holding vs. Swiss Re AG | Roche Holding vs. UBS Group AG |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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