Correlation Between Snap and Spectrum Advisors

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Can any of the company-specific risk be diversified away by investing in both Snap and Spectrum Advisors 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 Spectrum Advisors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Spectrum Advisors Preferred, you can compare the effects of market volatilities on Snap and Spectrum Advisors 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 Spectrum Advisors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Spectrum Advisors.

Diversification Opportunities for Snap and Spectrum Advisors

0.34
  Correlation Coefficient

Weak diversification

The 3 months correlation between Snap and Spectrum is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Spectrum Advisors Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spectrum Advisors 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 Spectrum Advisors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spectrum Advisors has no effect on the direction of Snap i.e., Snap and Spectrum Advisors go up and down completely randomly.

Pair Corralation between Snap and Spectrum Advisors

Given the investment horizon of 90 days Snap Inc is expected to generate 5.23 times more return on investment than Spectrum Advisors. However, Snap is 5.23 times more volatile than Spectrum Advisors Preferred. It trades about 0.08 of its potential returns per unit of risk. Spectrum Advisors Preferred is currently generating about 0.08 per unit of risk. If you would invest  1,089  in Snap Inc on August 30, 2024 and sell it today you would earn a total of  72.00  from holding Snap Inc or generate 6.61% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy95.65%
ValuesDaily Returns

Snap Inc  vs.  Spectrum Advisors Preferred

 Performance 
       Timeline  
Snap Inc 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Snap Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Snap reported solid returns over the last few months and may actually be approaching a breakup point.
Spectrum Advisors 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Spectrum Advisors Preferred are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Spectrum Advisors is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Snap and Spectrum Advisors Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Snap and Spectrum Advisors

The main advantage of trading using opposite Snap and Spectrum Advisors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Spectrum Advisors 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 Spectrum Advisors will offset losses from the drop in Spectrum Advisors' long position.
The idea behind Snap Inc and Spectrum Advisors Preferred 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.
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.

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