Correlation Between Snowflake and PAR TECHNOLOGY

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

By analyzing existing cross correlation between Snowflake and PAR TECHNOLOGY DL 02, you can compare the effects of market volatilities on Snowflake and PAR TECHNOLOGY 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 PAR TECHNOLOGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snowflake and PAR TECHNOLOGY.

Diversification Opportunities for Snowflake and PAR TECHNOLOGY

0.77

Correlation Coefficient

Snowflake  PAR TECHNOLOGY

Poor diversification

The 3 months correlation between Snowflake and PAR is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Snowflake and PAR TECHNOLOGY DL 02 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PAR TECHNOLOGY DL 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 PAR TECHNOLOGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PAR TECHNOLOGY DL has no effect on the direction of Snowflake i.e., Snowflake and PAR TECHNOLOGY go up and down completely randomly.

Pair Corralation between Snowflake and PAR TECHNOLOGY

Assuming the 90 days horizon Snowflake is expected to generate 0.65 times more return on investment than PAR TECHNOLOGY. However, Snowflake is 1.54 times less risky than PAR TECHNOLOGY. It trades about 0.1 of its potential returns per unit of risk. PAR TECHNOLOGY DL 02 is currently generating about 0.0 per unit of risk. If you would invest  14,200  in Snowflake on February 5, 2024 and sell it today you would earn a total of  472.00  from holding Snowflake or generate 3.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Snowflake  vs.  PAR TECHNOLOGY DL 02

Snowflake

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Snowflake has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

PAR TECHNOLOGY DL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PAR TECHNOLOGY DL 02 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, PAR TECHNOLOGY is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Snowflake and PAR TECHNOLOGY

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

The idea behind Snowflake and PAR TECHNOLOGY DL 02 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.