Correlation Between Snap and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both Snap and IShares MSCI 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 IShares MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and iShares MSCI USA, you can compare the effects of market volatilities on Snap and IShares MSCI 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 IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and IShares MSCI.
Diversification Opportunities for Snap and IShares MSCI
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Snap and IShares is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and iShares MSCI USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI USA 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 IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI USA has no effect on the direction of Snap i.e., Snap and IShares MSCI go up and down completely randomly.
Pair Corralation between Snap and IShares MSCI
Given the investment horizon of 90 days Snap Inc is expected to under-perform the IShares MSCI. In addition to that, Snap is 5.05 times more volatile than iShares MSCI USA. It trades about -0.03 of its total potential returns per unit of risk. iShares MSCI USA is currently generating about 0.15 per unit of volatility. If you would invest 13,700 in iShares MSCI USA on August 29, 2024 and sell it today you would earn a total of 2,159 from holding iShares MSCI USA or generate 15.76% 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. iShares MSCI USA
Performance |
| Timeline |
| Snap Inc |
| iShares MSCI USA |
Snap and IShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and IShares MSCI
The main advantage of trading using opposite Snap and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, IShares MSCI 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 IShares MSCI will offset losses from the drop in IShares MSCI's long position.The idea behind Snap Inc and iShares MSCI USA 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.| IShares MSCI vs. Morningstar Unconstrained Allocation | IShares MSCI vs. High Yield Municipal Fund | IShares MSCI vs. Via Renewables | IShares MSCI vs. Knife River |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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