Correlation Between Auto Trader and Snap
Can any of the company-specific risk be diversified away by investing in both Auto Trader 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 Auto Trader and Snap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Auto Trader Group and Snap Inc, you can compare the effects of market volatilities on Auto Trader 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 Auto Trader with a short position of Snap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auto Trader and Snap.
Diversification Opportunities for Auto Trader and Snap
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Auto and Snap is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Auto Trader Group and Snap Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Snap Inc and Auto Trader 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 Auto Trader Group 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 Auto Trader i.e., Auto Trader and Snap go up and down completely randomly.
Pair Corralation between Auto Trader and Snap
Assuming the 90 days trading horizon Auto Trader Group is expected to under-perform the Snap. But the stock apears to be less risky and, when comparing its historical volatility, Auto Trader Group is 1.54 times less risky than Snap. The stock trades about -0.31 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 773.00 in Snap Inc on August 19, 2025 and sell it today you would earn a total of 84.00 from holding Snap Inc or generate 10.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Auto Trader Group vs. Snap Inc
Performance |
| Timeline |
| Auto Trader Group |
| Snap Inc |
Auto Trader and Snap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Auto Trader and Snap
The main advantage of trading using opposite Auto Trader and Snap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auto Trader 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.| Auto Trader vs. Polar Capital Technology | Auto Trader vs. Auction Technology Group | Auto Trader vs. Trainline Plc | Auto Trader vs. Lindsell Train 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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