Correlation Between Snap and Arch Capital
Can any of the company-specific risk be diversified away by investing in both Snap and Arch Capital 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 Arch Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Arch Capital Group, you can compare the effects of market volatilities on Snap and Arch Capital 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 Arch Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Arch Capital.
Diversification Opportunities for Snap and Arch Capital
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Snap and Arch is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Arch Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arch Capital 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 Arch Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arch Capital Group has no effect on the direction of Snap i.e., Snap and Arch Capital go up and down completely randomly.
Pair Corralation between Snap and Arch Capital
Given the investment horizon of 90 days Snap Inc is expected to under-perform the Arch Capital. In addition to that, Snap is 2.21 times more volatile than Arch Capital Group. It trades about -0.03 of its total potential returns per unit of risk. Arch Capital Group is currently generating about 0.04 per unit of volatility. If you would invest 8,802 in Arch Capital Group on August 29, 2024 and sell it today you would earn a total of 704.00 from holding Arch Capital Group or generate 8.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.67% |
| Values | Daily Returns |
Snap Inc vs. Arch Capital Group
Performance |
| Timeline |
| Snap Inc |
| Arch Capital Group |
Snap and Arch Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Arch Capital
The main advantage of trading using opposite Snap and Arch Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Arch Capital 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 Arch Capital will offset losses from the drop in Arch Capital's long position.The idea behind Snap Inc and Arch Capital 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.| Arch Capital vs. Park Hotels Resorts | Arch Capital vs. Consolidated Communications Holdings | Arch Capital vs. Pebblebrook Hotel Trust | Arch Capital vs. NH HOTEL GROUP |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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