Correlation Between Snap and Simmons First
Can any of the company-specific risk be diversified away by investing in both Snap and Simmons First 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 Simmons First into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Simmons First National, you can compare the effects of market volatilities on Snap and Simmons First 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 Simmons First. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Simmons First.
Diversification Opportunities for Snap and Simmons First
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Snap and Simmons is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Simmons First National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simmons First National 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 Simmons First. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simmons First National has no effect on the direction of Snap i.e., Snap and Simmons First go up and down completely randomly.
Pair Corralation between Snap and Simmons First
Given the investment horizon of 90 days Snap is expected to generate 1.85 times less return on investment than Simmons First. In addition to that, Snap is 1.82 times more volatile than Simmons First National. It trades about 0.06 of its total potential returns per unit of risk. Simmons First National is currently generating about 0.2 per unit of volatility. If you would invest 2,116 in Simmons First National on August 28, 2024 and sell it today you would earn a total of 370.00 from holding Simmons First National or generate 17.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snap Inc vs. Simmons First National
Performance |
| Timeline |
| Snap Inc |
| Simmons First National |
Snap and Simmons First Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Simmons First
The main advantage of trading using opposite Snap and Simmons First positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Simmons First 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 Simmons First will offset losses from the drop in Simmons First's long position.The idea behind Snap Inc and Simmons First National 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.| Simmons First vs. Sandy Spring Bancorp | Simmons First vs. Home BancShares | Simmons First vs. Southside Bancshares, | Simmons First vs. ST Bancorp |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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