Correlation Between Snap and UBM Development
Can any of the company-specific risk be diversified away by investing in both Snap and UBM Development 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 UBM Development into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and UBM Development AG, you can compare the effects of market volatilities on Snap and UBM Development 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 UBM Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and UBM Development.
Diversification Opportunities for Snap and UBM Development
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Snap and UBM is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and UBM Development AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBM Development AG 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 UBM Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBM Development AG has no effect on the direction of Snap i.e., Snap and UBM Development go up and down completely randomly.
Pair Corralation between Snap and UBM Development
Given the investment horizon of 90 days Snap Inc is expected to generate 3.13 times more return on investment than UBM Development. However, Snap is 3.13 times more volatile than UBM Development AG. It trades about 0.1 of its potential returns per unit of risk. UBM Development AG is currently generating about -0.28 per unit of risk. If you would invest 1,071 in Snap Inc on August 28, 2024 and sell it today you would earn a total of 89.00 from holding Snap Inc or generate 8.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snap Inc vs. UBM Development AG
Performance |
| Timeline |
| Snap Inc |
| UBM Development AG |
Snap and UBM Development Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and UBM Development
The main advantage of trading using opposite Snap and UBM Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, UBM Development 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 UBM Development will offset losses from the drop in UBM Development's long position.The idea behind Snap Inc and UBM Development AG 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.| UBM Development vs. CA Immobilien Anlagen | UBM Development vs. S IMMO AG | UBM Development vs. IMMOFINANZ AG | UBM Development vs. Wienerberger AG |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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