Correlation Between Snap and IShares Core
Can any of the company-specific risk be diversified away by investing in both Snap and IShares Core 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 IShares Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and iShares Core Conservative, you can compare the effects of market volatilities on Snap and IShares Core 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 IShares Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and IShares Core.
Diversification Opportunities for Snap and IShares Core
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Snap and IShares is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and iShares Core Conservative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core Conservative 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 IShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core Conservative has no effect on the direction of Snap i.e., Snap and IShares Core go up and down completely randomly.
Pair Corralation between Snap and IShares Core
Given the investment horizon of 90 days Snap Inc is expected to generate 16.57 times more return on investment than IShares Core. However, Snap is 16.57 times more volatile than iShares Core Conservative. It trades about 0.1 of its potential returns per unit of risk. iShares Core Conservative is currently generating about 0.22 per unit of risk. If you would invest 1,071 in Snap Inc on August 29, 2024 and sell it today you would earn a total of 89.00 from holding Snap Inc or generate 8.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Snap Inc vs. iShares Core Conservative
Performance |
| Timeline |
| Snap Inc |
| iShares Core Conservative |
Snap and IShares Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and IShares Core
The main advantage of trading using opposite Snap and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, IShares Core 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 IShares Core will offset losses from the drop in IShares Core's long position.The idea behind Snap Inc and iShares Core Conservative 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.| IShares Core vs. iShares Core Income | IShares Core vs. iShares Core Balanced | IShares Core vs. Vanguard Conservative ETF | IShares Core vs. BMO Conservative ETF |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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