Correlation Between Snap and Societe Generale
Can any of the company-specific risk be diversified away by investing in both Snap and Societe Generale 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 Societe Generale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Societe Generale ADR, you can compare the effects of market volatilities on Snap and Societe Generale 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 Societe Generale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Societe Generale.
Diversification Opportunities for Snap and Societe Generale
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Snap and Societe is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Societe Generale ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Societe Generale ADR 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 Societe Generale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Societe Generale ADR has no effect on the direction of Snap i.e., Snap and Societe Generale go up and down completely randomly.
Pair Corralation between Snap and Societe Generale
Given the investment horizon of 90 days Snap Inc is expected to generate 1.58 times more return on investment than Societe Generale. However, Snap is 1.58 times more volatile than Societe Generale ADR. It trades about 0.1 of its potential returns per unit of risk. Societe Generale ADR is currently generating about 0.09 per unit of risk. If you would invest 1,071 in Snap Inc on August 28, 2024 and sell it today you would earn a total of 89.00 from holding Snap Inc or generate 8.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Snap Inc vs. Societe Generale ADR
Performance |
| Timeline |
| Snap Inc |
| Societe Generale ADR |
Snap and Societe Generale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Societe Generale
The main advantage of trading using opposite Snap and Societe Generale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Societe Generale 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 Societe Generale will offset losses from the drop in Societe Generale's long position.The idea behind Snap Inc and Societe Generale ADR 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.| Societe Generale vs. BNP Paribas SA | Societe Generale vs. Credit Agricole SA | Societe Generale vs. Intesa Sanpaolo SpA | Societe Generale vs. Commerzbank AG PK |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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