Correlation Between Snap and CarsalesCom
Can any of the company-specific risk be diversified away by investing in both Snap and CarsalesCom 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 CarsalesCom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and CarsalesCom, you can compare the effects of market volatilities on Snap and CarsalesCom 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 CarsalesCom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and CarsalesCom.
Diversification Opportunities for Snap and CarsalesCom
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Snap and CarsalesCom is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and CarsalesCom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarsalesCom 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 CarsalesCom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CarsalesCom has no effect on the direction of Snap i.e., Snap and CarsalesCom go up and down completely randomly.
Pair Corralation between Snap and CarsalesCom
Given the investment horizon of 90 days Snap is expected to generate 1.46 times less return on investment than CarsalesCom. In addition to that, Snap is 2.42 times more volatile than CarsalesCom. It trades about 0.03 of its total potential returns per unit of risk. CarsalesCom is currently generating about 0.11 per unit of volatility. If you would invest 1,328 in CarsalesCom on August 31, 2024 and sell it today you would earn a total of 1,232 from holding CarsalesCom or generate 92.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.42% |
| Values | Daily Returns |
Snap Inc vs. CarsalesCom
Performance |
| Timeline |
| Snap Inc |
| CarsalesCom |
Snap and CarsalesCom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and CarsalesCom
The main advantage of trading using opposite Snap and CarsalesCom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, CarsalesCom 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 CarsalesCom will offset losses from the drop in CarsalesCom's long position.The idea behind Snap Inc and CarsalesCom 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.| CarsalesCom vs. AEGEAN AIRLINES | CarsalesCom vs. CompuGroup Medical SE | CarsalesCom vs. IMAGIN MEDICAL INC | CarsalesCom vs. Nok Airlines PCL |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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