Correlation Between Snap and State Street
Can any of the company-specific risk be diversified away by investing in both Snap and State Street 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 State Street into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and State Street Target, you can compare the effects of market volatilities on Snap and State Street 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 State Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and State Street.
Diversification Opportunities for Snap and State Street
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Snap and State is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and State Street Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street Target 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 State Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Street Target has no effect on the direction of Snap i.e., Snap and State Street go up and down completely randomly.
Pair Corralation between Snap and State Street
Given the investment horizon of 90 days Snap Inc is expected to generate 7.88 times more return on investment than State Street. However, Snap is 7.88 times more volatile than State Street Target. It trades about 0.03 of its potential returns per unit of risk. State Street Target is currently generating about 0.11 per unit of risk. If you would invest 1,001 in Snap Inc on August 26, 2024 and sell it today you would earn a total of 141.00 from holding Snap Inc or generate 14.09% 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. State Street Target
Performance |
| Timeline |
| Snap Inc |
| State Street Target |
Snap and State Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and State Street
The main advantage of trading using opposite Snap and State Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, State Street 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 State Street will offset losses from the drop in State Street's long position.The idea behind Snap Inc and State Street Target 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.| State Street vs. State Street Target | State Street vs. State Street Target | State Street vs. Ssga International Stock | State Street vs. State Street Aggregate |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |