Correlation Between Snap and Unum
Can any of the company-specific risk be diversified away by investing in both Snap and Unum 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 Unum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Unum Group, you can compare the effects of market volatilities on Snap and Unum 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 Unum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Unum.
Diversification Opportunities for Snap and Unum
Poor diversification
The 3 months correlation between Snap and Unum is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Unum Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unum Group 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 Unum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unum Group has no effect on the direction of Snap i.e., Snap and Unum go up and down completely randomly.
Pair Corralation between Snap and Unum
Given the investment horizon of 90 days Snap is expected to generate 1.18 times less return on investment than Unum. In addition to that, Snap is 2.39 times more volatile than Unum Group. It trades about 0.03 of its total potential returns per unit of risk. Unum Group is currently generating about 0.09 per unit of volatility. If you would invest 3,864 in Unum Group on August 28, 2024 and sell it today you would earn a total of 3,757 from holding Unum Group or generate 97.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snap Inc vs. Unum Group
Performance |
| Timeline |
| Snap Inc |
| Unum Group |
Snap and Unum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Unum
The main advantage of trading using opposite Snap and Unum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Unum 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 Unum will offset losses from the drop in Unum's long position.The idea behind Snap Inc and Unum Group 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.| Unum vs. Morningstar Unconstrained Allocation | Unum vs. Via Renewables | Unum vs. Sitka Gold Corp | Unum vs. MSCI ACWI exAUCONSUMER |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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