Correlation Between Schnapp and Target
Can any of the company-specific risk be diversified away by investing in both Schnapp and Target 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 Schnapp and Target into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Schnapp and Target, you can compare the effects of market volatilities on Schnapp and Target 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 Schnapp with a short position of Target. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schnapp and Target.
Diversification Opportunities for Schnapp and Target
Very poor diversification
The 3 months correlation between Schnapp and Target is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Schnapp and Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target and Schnapp 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 Schnapp are associated (or correlated) with Target. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target has no effect on the direction of Schnapp i.e., Schnapp and Target go up and down completely randomly.
Pair Corralation between Schnapp and Target
Assuming the 90 days trading horizon Schnapp is expected to generate 1.17 times less return on investment than Target. In addition to that, Schnapp is 1.02 times more volatile than Target. It trades about 0.06 of its total potential returns per unit of risk. Target is currently generating about 0.07 per unit of volatility. If you would invest 13,151 in Target on January 24, 2024 and sell it today you would earn a total of 3,560 from holding Target or generate 27.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 81.08% |
| Values | Daily Returns |
Schnapp vs. Target
Performance |
| Timeline |
| Schnapp |
| Target |
Schnapp and Target Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Schnapp and Target
The main advantage of trading using opposite Schnapp and Target positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schnapp position performs unexpectedly, Target 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 Target will offset losses from the drop in Target's long position.| Schnapp vs. Clal Insurance Enterprises | Schnapp vs. Israel Discount Bank | Schnapp vs. Bezeq Israeli Telecommunication | Schnapp vs. Alony Hetz Properties |
| Target vs. Big Lots | Target vs. Aquagold International | Target vs. Thrivent High Yield | Target vs. Morningstar Unconstrained Allocation |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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