Correlation Between Snap and GraniteShares
Can any of the company-specific risk be diversified away by investing in both Snap and GraniteShares 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 GraniteShares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and GraniteShares 3x Short, you can compare the effects of market volatilities on Snap and GraniteShares 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 GraniteShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and GraniteShares.
Diversification Opportunities for Snap and GraniteShares
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Snap and GraniteShares is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and GraniteShares 3x Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GraniteShares 3x Short 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 GraniteShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GraniteShares 3x Short has no effect on the direction of Snap i.e., Snap and GraniteShares go up and down completely randomly.
Pair Corralation between Snap and GraniteShares
Given the investment horizon of 90 days Snap Inc is expected to generate 0.6 times more return on investment than GraniteShares. However, Snap Inc is 1.68 times less risky than GraniteShares. It trades about -0.11 of its potential returns per unit of risk. GraniteShares 3x Short is currently generating about -0.24 per unit of risk. If you would invest 1,262 in Snap Inc on August 31, 2024 and sell it today you would lose (101.00) from holding Snap Inc or give up 8.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snap Inc vs. GraniteShares 3x Short
Performance |
| Timeline |
| Snap Inc |
| GraniteShares 3x Short |
Snap and GraniteShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and GraniteShares
The main advantage of trading using opposite Snap and GraniteShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, GraniteShares 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 GraniteShares will offset losses from the drop in GraniteShares' long position.The idea behind Snap Inc and GraniteShares 3x Short 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.| GraniteShares vs. Scottish Mortgage Investment | GraniteShares vs. VinaCapital Vietnam Opportunity | GraniteShares vs. Edinburgh Worldwide Investment | GraniteShares vs. Baillie Gifford Growth |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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