Correlation Between Snap and Security Bank
Can any of the company-specific risk be diversified away by investing in both Snap and Security Bank 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 Security Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Security Bank Corp, you can compare the effects of market volatilities on Snap and Security Bank 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 Security Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Security Bank.
Diversification Opportunities for Snap and Security Bank
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Snap and Security is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Security Bank Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Security Bank Corp 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 Security Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Security Bank Corp has no effect on the direction of Snap i.e., Snap and Security Bank go up and down completely randomly.
Pair Corralation between Snap and Security Bank
Given the investment horizon of 90 days Snap Inc is expected to generate 1.18 times more return on investment than Security Bank. However, Snap is 1.18 times more volatile than Security Bank Corp. It trades about -0.03 of its potential returns per unit of risk. Security Bank Corp is currently generating about -0.06 per unit of risk. If you would invest 1,216 in Snap Inc on September 1, 2024 and sell it today you would lose (35.00) from holding Snap Inc or give up 2.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snap Inc vs. Security Bank Corp
Performance |
| Timeline |
| Snap Inc |
| Security Bank Corp |
Snap and Security Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Security Bank
The main advantage of trading using opposite Snap and Security Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Security Bank 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 Security Bank will offset losses from the drop in Security Bank's long position.The idea behind Snap Inc and Security Bank Corp 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.| Security Bank vs. Metropolitan Bank Trust | Security Bank vs. Philippine National Bank | Security Bank vs. Asia United Bank | Security Bank vs. Philippine Savings Bank |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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