Correlation Between Snap and SJM Holdings
Can any of the company-specific risk be diversified away by investing in both Snap and SJM Holdings 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 SJM Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and SJM Holdings Ltd, you can compare the effects of market volatilities on Snap and SJM Holdings 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 SJM Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and SJM Holdings.
Diversification Opportunities for Snap and SJM Holdings
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Snap and SJM is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and SJM Holdings Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SJM Holdings 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 SJM Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SJM Holdings has no effect on the direction of Snap i.e., Snap and SJM Holdings go up and down completely randomly.
Pair Corralation between Snap and SJM Holdings
Given the investment horizon of 90 days Snap Inc is expected to generate 0.8 times more return on investment than SJM Holdings. However, Snap Inc is 1.25 times less risky than SJM Holdings. It trades about 0.12 of its potential returns per unit of risk. SJM Holdings Ltd is currently generating about -0.22 per unit of risk. If you would invest 1,027 in Snap Inc on August 25, 2024 and sell it today you would earn a total of 115.00 from holding Snap Inc or generate 11.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Snap Inc vs. SJM Holdings Ltd
Performance |
| Timeline |
| Snap Inc |
| SJM Holdings |
Snap and SJM Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and SJM Holdings
The main advantage of trading using opposite Snap and SJM Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, SJM Holdings 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 SJM Holdings will offset losses from the drop in SJM Holdings' long position.The idea behind Snap Inc and SJM Holdings Ltd 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.| SJM Holdings vs. Sands China Ltd | SJM Holdings vs. Studio City International | SJM Holdings vs. Monarch Casino Resort | SJM Holdings vs. Playa Hotels Resorts |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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