Correlation Between Snap and Hour Loop

Can any of the company-specific risk be diversified away by investing in both Snap and Hour Loop 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 Hour Loop into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Snap Inc and Hour Loop, you can compare the effects of market volatilities on Snap and Hour Loop 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 Hour Loop. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Hour Loop.

Diversification Opportunities for Snap and Hour Loop

0.0

Correlation Coefficient

Snap  Hour Loop

Pay attention - limited upside

The 3 months correlation between Snap and Hour is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Hour Loop in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hour Loop 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 Hour Loop. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hour Loop has no effect on the direction of Snap i.e., Snap and Hour Loop go up and down completely randomly.

Pair Corralation between Snap and Hour Loop

Given the investment horizon of 90 days Snap is expected to generate 1.25 times less return on investment than Hour Loop. But when comparing it to its historical volatility, Snap Inc is 1.5 times less risky than Hour Loop. It trades about 0.09 of its potential returns per unit of risk. Hour Loop is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  136.00  in Hour Loop on September 15, 2024 and sell it today you would earn a total of  25.00  from holding Hour Loop or generate 18.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Snap Inc  vs.  Hour Loop

Snap Inc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Snap Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Snap reported solid returns over the last few months and may actually be approaching a breakup point.

Hour Loop

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hour Loop are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Hour Loop reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Snap and Hour Loop

The main advantage of trading using opposite Snap and Hour Loop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Hour Loop 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 Hour Loop will offset losses from the drop in Hour Loop's long position.

The idea behind Snap Inc and Hour Loop 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.

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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.