Correlation Between Perion Network and Snap

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

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

Diversification Opportunities for Perion Network and Snap

0.7

Correlation Coefficient

Perion Network  Snap

Poor diversification

The 3 months correlation between Perion and Snap is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Perion Network and Snap Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Snap Inc and Perion Network 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 Perion Network 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 Perion Network i.e., Perion Network and Snap go up and down completely randomly.

Pair Corralation between Perion Network and Snap

Given the investment horizon of 90 days Perion Network is expected to generate 0.55 times more return on investment than Snap. However, Perion Network is 1.81 times less risky than Snap. It trades about 0.0 of its potential returns per unit of risk. Snap Inc is currently generating about -0.06 per unit of risk. If you would invest  863.00  in Perion Network on September 30, 2024 and sell it today you would lose (18.00) from holding Perion Network or give up 2.09% of portfolio value over 90 days.

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

Perion Network  vs.  Snap Inc

Perion Network

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Perion Network are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Perion Network may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Snap Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Snap Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Snap is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Perion Network and Snap

The main advantage of trading using opposite Perion Network and Snap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Perion Network 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 Perion Network 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.