Correlation Between Snap and Booking Holdings
Can any of the company-specific risk be diversified away by investing in both Snap and Booking Holdings 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 Booking Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Booking Holdings, you can compare the effects of market volatilities on Snap and Booking Holdings 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 Booking Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Booking Holdings.
Diversification Opportunities for Snap and Booking Holdings
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Snap and Booking is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Booking Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Booking Holdings 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 Booking Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Booking Holdings has no effect on the direction of Snap i.e., Snap and Booking Holdings go up and down completely randomly.
Pair Corralation between Snap and Booking Holdings
Given the investment horizon of 90 days Snap Inc is expected to generate 1.78 times more return on investment than Booking Holdings. However, Snap is 1.78 times more volatile than Booking Holdings. It trades about 0.08 of its potential returns per unit of risk. Booking Holdings is currently generating about -0.06 per unit of risk. If you would invest 1,105 in Snap Inc on January 19, 2024 and sell it today you would earn a total of 43.00 from holding Snap Inc or generate 3.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snap Inc vs. Booking Holdings
Performance |
| Timeline |
| Snap Inc |
| Booking Holdings |
Snap and Booking Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Booking Holdings
The main advantage of trading using opposite Snap and Booking Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Booking Holdings 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 Booking Holdings will offset losses from the drop in Booking Holdings' long position.The idea behind Snap Inc and Booking Holdings 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.| Booking Holdings vs. TUI AG | Booking Holdings vs. Inspirato | Booking Holdings vs. TripAdvisor | Booking Holdings vs. Travel Leisure Co |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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