Correlation Between Snap and Trivago NV

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

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

Diversification Opportunities for Snap and Trivago NV

-0.57

Correlation Coefficient

Snap  Trivago NV

Excellent diversification

The 3 months correlation between Snap and Trivago is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Trivago NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trivago NV 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 Trivago NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trivago NV has no effect on the direction of Snap i.e., Snap and Trivago NV go up and down completely randomly.

Pair Corralation between Snap and Trivago NV

Given the investment horizon of 90 days Snap Inc is expected to under-perform the Trivago NV. But the stock apears to be less risky and, when comparing its historical volatility, Snap Inc is 1.92 times less risky than Trivago NV. The stock trades about -0.07 of its potential returns per unit of risk. The Trivago NV is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  231.00  in Trivago NV on December 28, 2024 and sell it today you would earn a total of  274.00  from holding Trivago NV or generate 118.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Snap Inc  vs.  Trivago NV

Snap Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Snap Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Trivago NV

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Trivago NV are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, Trivago NV reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Snap and Trivago NV

The main advantage of trading using opposite Snap and Trivago NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Trivago NV 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 Trivago NV will offset losses from the drop in Trivago NV's long position.

The idea behind Snap Inc and Trivago NV 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.