Correlation Between Snap and Woori Financial
Can any of the company-specific risk be diversified away by investing in both Snap and Woori Financial 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 Woori Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Woori Financial Group, you can compare the effects of market volatilities on Snap and Woori Financial 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 Woori Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Woori Financial.
Diversification Opportunities for Snap and Woori Financial
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Snap and Woori is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Woori Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woori Financial 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 Woori Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woori Financial Group has no effect on the direction of Snap i.e., Snap and Woori Financial go up and down completely randomly.
Pair Corralation between Snap and Woori Financial
Given the investment horizon of 90 days Snap Inc is expected to generate 2.25 times more return on investment than Woori Financial. However, Snap is 2.25 times more volatile than Woori Financial Group. It trades about 0.03 of its potential returns per unit of risk. Woori Financial Group is currently generating about 0.06 per unit of risk. If you would invest 942.00 in Snap Inc on August 27, 2024 and sell it today you would earn a total of 200.00 from holding Snap Inc or generate 21.23% 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. Woori Financial Group
Performance |
| Timeline |
| Snap Inc |
| Woori Financial Group |
Snap and Woori Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Woori Financial
The main advantage of trading using opposite Snap and Woori Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Woori Financial 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 Woori Financial will offset losses from the drop in Woori Financial's long position.The idea behind Snap Inc and Woori Financial 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.| Woori Financial vs. Banco Santander Brasil | Woori Financial vs. CrossFirst Bankshares | Woori Financial vs. Banco Bradesco SA | Woori Financial vs. CF Bankshares |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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