Correlation Between Snowflake and Amentum Holdings
Can any of the company-specific risk be diversified away by investing in both Snowflake and Amentum Holdings 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 Snowflake and Amentum Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snowflake and Amentum Holdings, you can compare the effects of market volatilities on Snowflake and Amentum Holdings 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 Snowflake with a short position of Amentum Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snowflake and Amentum Holdings.
Diversification Opportunities for Snowflake and Amentum Holdings
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Snowflake and Amentum is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Snowflake and Amentum Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amentum Holdings and Snowflake 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 Snowflake are associated (or correlated) with Amentum Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amentum Holdings has no effect on the direction of Snowflake i.e., Snowflake and Amentum Holdings go up and down completely randomly.
Pair Corralation between Snowflake and Amentum Holdings
Given the investment horizon of 90 days Snowflake is expected to generate 0.81 times more return on investment than Amentum Holdings. However, Snowflake is 1.24 times less risky than Amentum Holdings. It trades about 0.16 of its potential returns per unit of risk. Amentum Holdings is currently generating about -0.04 per unit of risk. If you would invest 11,299 in Snowflake on September 12, 2024 and sell it today you would earn a total of 5,856 from holding Snowflake or generate 51.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 87.3% |
| Values | Daily Returns |
Snowflake vs. Amentum Holdings
Performance |
| Timeline |
| Snowflake |
| Amentum Holdings |
Snowflake and Amentum Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snowflake and Amentum Holdings
The main advantage of trading using opposite Snowflake and Amentum Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snowflake position performs unexpectedly, Amentum Holdings 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 Amentum Holdings will offset losses from the drop in Amentum Holdings' long position.The idea behind Snowflake and Amentum Holdings 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.| Amentum Holdings vs. Flexible Solutions International | Amentum Holdings vs. Olympic Steel | Amentum Holdings vs. Harmony Gold Mining | Amentum Holdings vs. National Beverage Corp |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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