Correlation Between Snap and SPDR SSGA
Can any of the company-specific risk be diversified away by investing in both Snap and SPDR SSGA 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 SPDR SSGA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and SPDR SSGA Sector, you can compare the effects of market volatilities on Snap and SPDR SSGA 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 SPDR SSGA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and SPDR SSGA.
Diversification Opportunities for Snap and SPDR SSGA
Poor diversification
The 3 months correlation between Snap and SPDR is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and SPDR SSGA Sector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SSGA Sector 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 SPDR SSGA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SSGA Sector has no effect on the direction of Snap i.e., Snap and SPDR SSGA go up and down completely randomly.
Pair Corralation between Snap and SPDR SSGA
Given the investment horizon of 90 days Snap Inc is expected to generate 5.85 times more return on investment than SPDR SSGA. However, Snap is 5.85 times more volatile than SPDR SSGA Sector. It trades about 0.08 of its potential returns per unit of risk. SPDR SSGA Sector is currently generating about 0.21 per unit of risk. If you would invest 1,089 in Snap Inc on August 30, 2024 and sell it today you would earn a total of 72.00 from holding Snap Inc or generate 6.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snap Inc vs. SPDR SSGA Sector
Performance |
| Timeline |
| Snap Inc |
| SPDR SSGA Sector |
Snap and SPDR SSGA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and SPDR SSGA
The main advantage of trading using opposite Snap and SPDR SSGA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, SPDR SSGA 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 SPDR SSGA will offset losses from the drop in SPDR SSGA's long position.The idea behind Snap Inc and SPDR SSGA Sector 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.| SPDR SSGA vs. SPDR SSGA Fixed | SPDR SSGA vs. BlackRock Equity Factor | SPDR SSGA vs. SPDR FactSet Innovative | SPDR SSGA vs. SPDR SP Telecom |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
Other Complementary Tools
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios |