Correlation Between Gitlab and Snowflake

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

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

Diversification Opportunities for Gitlab and Snowflake

0.77

Correlation Coefficient

Gitlab  Snowflake

Poor diversification

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

Pair Corralation between Gitlab and Snowflake

Given the investment horizon of 90 days Gitlab is expected to generate 1.01 times less return on investment than Snowflake. In addition to that, Gitlab is 1.49 times more volatile than Snowflake. It trades about 0.21 of its total potential returns per unit of risk. Snowflake is currently generating about 0.31 per unit of volatility. If you would invest  14,721  in Snowflake on February 21, 2024 and sell it today you would earn a total of  1,757  from holding Snowflake or generate 11.94% return on investment over 90 days.

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

Gitlab Inc  vs.  Snowflake

Gitlab Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gitlab Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

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. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in June 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Gitlab and Snowflake

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

The idea behind Gitlab Inc and Snowflake 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.

Check out your portfolio center.

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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.