Correlation Between Snap and AB Ultra
Can any of the company-specific risk be diversified away by investing in both Snap and AB Ultra 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 AB Ultra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and AB Ultra Short, you can compare the effects of market volatilities on Snap and AB Ultra 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 AB Ultra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and AB Ultra.
Diversification Opportunities for Snap and AB Ultra
Poor diversification
The 3 months correlation between Snap and YEAR is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and AB Ultra Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB Ultra Short 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 AB Ultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB Ultra Short has no effect on the direction of Snap i.e., Snap and AB Ultra go up and down completely randomly.
Pair Corralation between Snap and AB Ultra
Given the investment horizon of 90 days Snap Inc is expected to generate 47.54 times more return on investment than AB Ultra. However, Snap is 47.54 times more volatile than AB Ultra Short. It trades about 0.03 of its potential returns per unit of risk. AB Ultra Short is currently generating about 0.26 per unit of risk. If you would invest 940.00 in Snap Inc on August 29, 2024 and sell it today you would earn a total of 221.00 from holding Snap Inc or generate 23.51% 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. AB Ultra Short
Performance |
| Timeline |
| Snap Inc |
| AB Ultra Short |
Snap and AB Ultra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and AB Ultra
The main advantage of trading using opposite Snap and AB Ultra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, AB Ultra 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 AB Ultra will offset losses from the drop in AB Ultra's long position.The idea behind Snap Inc and AB Ultra Short 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.| AB Ultra vs. Ab Tax Aware Short | AB Ultra vs. Simplify Exchange Traded | AB Ultra vs. Forestar Group | AB Ultra vs. Bondbloxx ETF Trust |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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