Correlation Between Snap and Cardlytics

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Can any of the company-specific risk be diversified away by investing in both Snap and Cardlytics 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 Cardlytics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Cardlytics, you can compare the effects of market volatilities on Snap and Cardlytics 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 Cardlytics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Cardlytics.

Diversification Opportunities for Snap and Cardlytics

-0.33
  Correlation Coefficient

Very good diversification

The 3 months correlation between Snap and Cardlytics is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Cardlytics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardlytics 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 Cardlytics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardlytics has no effect on the direction of Snap i.e., Snap and Cardlytics go up and down completely randomly.

Pair Corralation between Snap and Cardlytics

Given the investment horizon of 90 days Snap Inc is expected to under-perform the Cardlytics. But the stock apears to be less risky and, when comparing its historical volatility, Snap Inc is 1.86 times less risky than Cardlytics. The stock trades about -0.01 of its potential returns per unit of risk. The Cardlytics is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  4,733  in Cardlytics on December 30, 2023 and sell it today you would lose (3,284) from holding Cardlytics or give up 69.39% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Snap Inc  vs.  Cardlytics

 Performance 
       Timeline  
Snap Inc 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
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 unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.
Cardlytics 

Risk-Adjusted Performance

8 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Cardlytics are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady essential indicators, Cardlytics showed solid returns over the last few months and may actually be approaching a breakup point.

Snap and Cardlytics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Snap and Cardlytics

The main advantage of trading using opposite Snap and Cardlytics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Cardlytics 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 Cardlytics will offset losses from the drop in Cardlytics' long position.
The idea behind Snap Inc and Cardlytics 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 Stocks Directory module to find actively traded stocks across global markets.

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