Correlation Between Uber Technologies and Snowflake
Can any of the company-specific risk be diversified away by investing in both Uber Technologies and Snowflake 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 Uber Technologies and Snowflake into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Uber Technologies and Snowflake, you can compare the effects of market volatilities on Uber Technologies and Snowflake 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 Uber Technologies with a short position of Snowflake. Check out your portfolio center. Please also check ongoing floating volatility patterns of Uber Technologies and Snowflake.
Diversification Opportunities for Uber Technologies and Snowflake
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Uber and Snowflake is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Uber Technologies and Snowflake in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Snowflake and Uber Technologies 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 Uber Technologies are associated (or correlated) with Snowflake. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Snowflake has no effect on the direction of Uber Technologies i.e., Uber Technologies and Snowflake go up and down completely randomly.
Pair Corralation between Uber Technologies and Snowflake
Given the investment horizon of 90 days Uber Technologies is expected to under-perform the Snowflake. But the stock apears to be less risky and, when comparing its historical volatility, Uber Technologies is 2.84 times less risky than Snowflake. The stock trades about -0.23 of its potential returns per unit of risk. The Snowflake is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 11,361 in Snowflake on August 24, 2024 and sell it today you would earn a total of 5,774 from holding Snowflake or generate 50.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Uber Technologies vs. Snowflake
Performance |
| Timeline |
| Uber Technologies |
| Snowflake |
Uber Technologies and Snowflake Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Uber Technologies and Snowflake
The main advantage of trading using opposite Uber Technologies and Snowflake positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Uber Technologies position performs unexpectedly, Snowflake 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 Snowflake will offset losses from the drop in Snowflake's long position.| Uber Technologies vs. Manhattan Associates | Uber Technologies vs. Paycom Soft | Uber Technologies vs. Clearwater Analytics Holdings | Uber Technologies vs. Procore Technologies |
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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