Correlation Between Snap and Shutterstock
Can any of the company-specific risk be diversified away by investing in both Snap and Shutterstock 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 Shutterstock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Shutterstock, you can compare the effects of market volatilities on Snap and Shutterstock 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 Shutterstock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Shutterstock.
Diversification Opportunities for Snap and Shutterstock
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Snap and Shutterstock is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Shutterstock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shutterstock 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 Shutterstock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shutterstock has no effect on the direction of Snap i.e., Snap and Shutterstock go up and down completely randomly.
Pair Corralation between Snap and Shutterstock
Given the investment horizon of 90 days Snap Inc is expected to under-perform the Shutterstock. But the stock apears to be less risky and, when comparing its historical volatility, Snap Inc is 1.64 times less risky than Shutterstock. The stock trades about -0.16 of its potential returns per unit of risk. The Shutterstock is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 3,005 in Shutterstock on November 5, 2024 and sell it today you would lose (53.00) from holding Shutterstock or give up 1.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snap Inc vs. Shutterstock
Performance |
| Timeline |
| Snap Inc |
| Shutterstock |
Snap and Shutterstock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Shutterstock
The main advantage of trading using opposite Snap and Shutterstock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Shutterstock 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 Shutterstock will offset losses from the drop in Shutterstock's long position.The idea behind Snap Inc and Shutterstock 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.| Shutterstock vs. Yelp Inc | Shutterstock vs. Match Group | Shutterstock vs. Snap Inc | Shutterstock vs. Onfolio Holdings |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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