Correlation Between Snap One and Avnet

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

By analyzing existing cross correlation between Snap One Holdings and Avnet Inc, you can compare the effects of market volatilities on Snap One and Avnet 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 One with a short position of Avnet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap One and Avnet.

Diversification Opportunities for Snap One and Avnet

0.54

Correlation Coefficient

Snap One  Avnet

Very weak diversification

The 3 months correlation between Snap and Avnet is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Snap One Holdings and Avnet Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avnet Inc and Snap One 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 One Holdings are associated (or correlated) with Avnet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avnet Inc has no effect on the direction of Snap One i.e., Snap One and Avnet go up and down completely randomly.

Pair Corralation between Snap One and Avnet

If you would invest  5,182  in Avnet Inc on September 3, 2024 and sell it today you would earn a total of  289.00  from holding Avnet Inc or generate 5.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	1.56%
Values	Daily Returns

Snap One Holdings  vs.  Avnet Inc

Snap One Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Snap One Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Snap One is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Avnet Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Avnet Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Avnet is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Snap One and Avnet

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

The idea behind Snap One Holdings and Avnet Inc 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.