Correlation Between Snap and 1st Source
Can any of the company-specific risk be diversified away by investing in both Snap and 1st Source 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 1st Source into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and 1st Source, you can compare the effects of market volatilities on Snap and 1st Source 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 1st Source. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and 1st Source.
Diversification Opportunities for Snap and 1st Source
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Snap and 1st is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and 1st Source in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1st Source 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 1st Source. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1st Source has no effect on the direction of Snap i.e., Snap and 1st Source go up and down completely randomly.
Pair Corralation between Snap and 1st Source
Given the investment horizon of 90 days Snap Inc is expected to generate 2.07 times more return on investment than 1st Source. However, Snap is 2.07 times more volatile than 1st Source. It trades about 0.04 of its potential returns per unit of risk. 1st Source is currently generating about 0.08 per unit of risk. If you would invest 791.00 in Snap Inc on August 26, 2024 and sell it today you would earn a total of 351.00 from holding Snap Inc or generate 44.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snap Inc vs. 1st Source
Performance |
| Timeline |
| Snap Inc |
| 1st Source |
Snap and 1st Source Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and 1st Source
The main advantage of trading using opposite Snap and 1st Source positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, 1st Source 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 1st Source will offset losses from the drop in 1st Source's long position.The idea behind Snap Inc and 1st Source 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.| 1st Source vs. Penns Woods Bancorp | 1st Source vs. Great Southern Bancorp | 1st Source vs. Waterstone Financial | 1st Source vs. Chemung Financial Corp |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |