Correlation Between Snap and Steadfast
Can any of the company-specific risk be diversified away by investing in both Snap and Steadfast 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 Steadfast into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Steadfast Group, you can compare the effects of market volatilities on Snap and Steadfast 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 Steadfast. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Steadfast.
Diversification Opportunities for Snap and Steadfast
Excellent diversification
The 3 months correlation between Snap and Steadfast is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Steadfast Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steadfast 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 Steadfast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steadfast Group has no effect on the direction of Snap i.e., Snap and Steadfast go up and down completely randomly.
Pair Corralation between Snap and Steadfast
Given the investment horizon of 90 days Snap Inc is expected to under-perform the Steadfast. In addition to that, Snap is 3.18 times more volatile than Steadfast Group. It trades about -0.01 of its total potential returns per unit of risk. Steadfast Group is currently generating about 0.02 per unit of volatility. If you would invest 566.00 in Steadfast Group on August 25, 2024 and sell it today you would earn a total of 15.00 from holding Steadfast Group or generate 2.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.13% |
| Values | Daily Returns |
Snap Inc vs. Steadfast Group
Performance |
| Timeline |
| Snap Inc |
| Steadfast Group |
Snap and Steadfast Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Steadfast
The main advantage of trading using opposite Snap and Steadfast positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Steadfast 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 Steadfast will offset losses from the drop in Steadfast's long position.The idea behind Snap Inc and Steadfast 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.| Steadfast vs. Alto Metals | Steadfast vs. Ainsworth Game Technology | Steadfast vs. TPG Telecom | Steadfast vs. Thorney Technologies |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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