Correlation Between Snap and Shoals Technologies
Can any of the company-specific risk be diversified away by investing in both Snap and Shoals Technologies 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 Shoals Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Shoals Technologies Group, you can compare the effects of market volatilities on Snap and Shoals Technologies 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 Shoals Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Shoals Technologies.
Diversification Opportunities for Snap and Shoals Technologies
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Snap and Shoals is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Shoals Technologies Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shoals Technologies 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 Shoals Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shoals Technologies has no effect on the direction of Snap i.e., Snap and Shoals Technologies go up and down completely randomly.
Pair Corralation between Snap and Shoals Technologies
Given the investment horizon of 90 days Snap Inc is expected to generate 0.76 times more return on investment than Shoals Technologies. However, Snap Inc is 1.32 times less risky than Shoals Technologies. It trades about 0.1 of its potential returns per unit of risk. Shoals Technologies Group is currently generating about -0.01 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snap Inc vs. Shoals Technologies Group
Performance |
| Timeline |
| Snap Inc |
| Shoals Technologies |
Snap and Shoals Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Shoals Technologies
The main advantage of trading using opposite Snap and Shoals Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Shoals Technologies 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 Shoals Technologies will offset losses from the drop in Shoals Technologies' long position.The idea behind Snap Inc and Shoals Technologies 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.| Shoals Technologies vs. 1847 Holdings LLC | Shoals Technologies vs. Westport Fuel Systems | Shoals Technologies vs. Falcons Beyond Global, | Shoals Technologies vs. Brookfield Business Partners |
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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