Correlation Between Snap and Infosys
Can any of the company-specific risk be diversified away by investing in both Snap and Infosys 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 Infosys into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Infosys Ltd ADR, you can compare the effects of market volatilities on Snap and Infosys 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 Infosys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Infosys.
Diversification Opportunities for Snap and Infosys
Weak diversification
The 3 months correlation between Snap and Infosys is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Infosys Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infosys Ltd ADR 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 Infosys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infosys Ltd ADR has no effect on the direction of Snap i.e., Snap and Infosys go up and down completely randomly.
Pair Corralation between Snap and Infosys
Given the investment horizon of 90 days Snap Inc is expected to generate 1.53 times more return on investment than Infosys. However, Snap is 1.53 times more volatile than Infosys Ltd ADR. It trades about -0.14 of its potential returns per unit of risk. Infosys Ltd ADR is currently generating about -0.36 per unit of risk. If you would invest 1,106 in Snap Inc on January 16, 2024 and sell it today you would lose (72.00) from holding Snap Inc or give up 6.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snap Inc vs. Infosys Ltd ADR
Performance |
| Timeline |
| Snap Inc |
| Infosys Ltd ADR |
Snap and Infosys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Infosys
The main advantage of trading using opposite Snap and Infosys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Infosys 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 Infosys will offset losses from the drop in Infosys' long position.The idea behind Snap Inc and Infosys Ltd ADR 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.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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
Other Complementary Tools
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences |