Correlation Between Shutterstock and Snap

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

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

Diversification Opportunities for Shutterstock and Snap

-0.28

Correlation Coefficient

Shutterstock  Snap

Very good diversification

The 3 months correlation between Shutterstock and Snap is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Shutterstock and Snap Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Snap Inc and Shutterstock 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 Shutterstock are associated (or correlated) with Snap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Snap Inc has no effect on the direction of Shutterstock i.e., Shutterstock and Snap go up and down completely randomly.

Pair Corralation between Shutterstock and Snap

Given the investment horizon of 90 days Shutterstock is expected to under-perform the Snap. But the stock apears to be less risky and, when comparing its historical volatility, Shutterstock is 1.19 times less risky than Snap. The stock trades about -0.03 of its potential returns per unit of risk. The Snap Inc is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  886.00  in Snap Inc on September 2, 2024 and sell it today you would earn a total of  295.00  from holding Snap Inc or generate 33.3% return on investment over 90 days.

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

Shutterstock  vs.  Snap Inc

Shutterstock

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shutterstock has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Shutterstock is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Snap Inc

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Snap Inc are ranked lower than 12 (%) 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.

Pair Trading with Shutterstock and Snap

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

The idea behind Shutterstock and Snap 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.