Correlation Between Snowflake and ISign Solutions

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

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

Diversification Opportunities for Snowflake and ISign Solutions

-0.15

Correlation Coefficient

Snowflake  ISign Solutions

Good diversification

The 3 months correlation between Snowflake and ISign is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Snowflake and iSign Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iSign Solutions and Snowflake 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 Snowflake are associated (or correlated) with ISign Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iSign Solutions has no effect on the direction of Snowflake i.e., Snowflake and ISign Solutions go up and down completely randomly.

Pair Corralation between Snowflake and ISign Solutions

If you would invest  11,284  in Snowflake on September 15, 2024 and sell it today you would earn a total of  5,483  from holding Snowflake or generate 48.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Snowflake  vs.  iSign Solutions

Snowflake

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Snowflake are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Snowflake showed solid returns over the last few months and may actually be approaching a breakup point.

iSign Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iSign Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, ISign Solutions is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Snowflake and ISign Solutions

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

The idea behind Snowflake and iSign Solutions 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.