Correlation Between Snap and US Treasury
Can any of the company-specific risk be diversified away by investing in both Snap and US Treasury 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 US Treasury into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and US Treasury 7, you can compare the effects of market volatilities on Snap and US Treasury 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 US Treasury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and US Treasury.
Diversification Opportunities for Snap and US Treasury
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Snap and USVN is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and US Treasury 7 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Treasury 7 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 US Treasury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Treasury 7 has no effect on the direction of Snap i.e., Snap and US Treasury go up and down completely randomly.
Pair Corralation between Snap and US Treasury
Given the investment horizon of 90 days Snap Inc is expected to under-perform the US Treasury. In addition to that, Snap is 7.91 times more volatile than US Treasury 7. It trades about -0.11 of its total potential returns per unit of risk. US Treasury 7 is currently generating about 0.05 per unit of volatility. If you would invest 4,768 in US Treasury 7 on August 31, 2024 and sell it today you would earn a total of 21.00 from holding US Treasury 7 or generate 0.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snap Inc vs. US Treasury 7
Performance |
| Timeline |
| Snap Inc |
| US Treasury 7 |
Snap and US Treasury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and US Treasury
The main advantage of trading using opposite Snap and US Treasury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, US Treasury 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 US Treasury will offset losses from the drop in US Treasury's long position.The idea behind Snap Inc and US Treasury 7 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.| US Treasury vs. SPDR Portfolio Mortgage | US Treasury vs. Janus Henderson Short | US Treasury vs. iShares CMBS ETF | US Treasury vs. Janus Detroit Street |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
Other Complementary Tools
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |