Correlation Between Snap and Vapor
Can any of the company-specific risk be diversified away by investing in both Snap and Vapor 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 Vapor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Vapor Group, you can compare the effects of market volatilities on Snap and Vapor 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 Vapor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Vapor.
Diversification Opportunities for Snap and Vapor
Pay attention - limited upside
The 3 months correlation between Snap and Vapor is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Vapor Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vapor 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 Vapor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vapor Group has no effect on the direction of Snap i.e., Snap and Vapor go up and down completely randomly.
Pair Corralation between Snap and Vapor
Given the investment horizon of 90 days Snap is expected to generate 16.79 times less return on investment than Vapor. But when comparing it to its historical volatility, Snap Inc is 11.35 times less risky than Vapor. It trades about 0.03 of its potential returns per unit of risk. Vapor Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 0.01 in Vapor Group on August 24, 2024 and sell it today you would earn a total of 0.00 from holding Vapor Group or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snap Inc vs. Vapor Group
Performance |
| Timeline |
| Snap Inc |
| Vapor Group |
Snap and Vapor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Vapor
The main advantage of trading using opposite Snap and Vapor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Vapor 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 Vapor will offset losses from the drop in Vapor's long position.The idea behind Snap Inc and Vapor 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.| Vapor vs. Green Cures Botanical | Vapor vs. Easton Pharmaceutica | Vapor vs. Rocky Mountain High | Vapor vs. American Green |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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