Correlation Between Snowflake and Elastic NV

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

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

Diversification Opportunities for Snowflake and Elastic NV

0.97

Correlation Coefficient

Snowflake  Elastic NV

Almost no diversification

The 3 months correlation between Snowflake and Elastic is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Snowflake and Elastic NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elastic NV 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 Elastic NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elastic NV has no effect on the direction of Snowflake i.e., Snowflake and Elastic NV go up and down completely randomly.

Pair Corralation between Snowflake and Elastic NV

Given the investment horizon of 90 days Snowflake is expected to under-perform the Elastic NV. In addition to that, Snowflake is 1.1 times more volatile than Elastic NV. It trades about -0.06 of its total potential returns per unit of risk. Elastic NV is currently generating about -0.01 per unit of volatility. If you would invest  10,680  in Elastic NV on February 6, 2024 and sell it today you would lose (114.00) from holding Elastic NV or give up 1.07% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	97.67%
Values	Daily Returns

Snowflake  vs.  Elastic NV

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 unfluctuating 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.

Elastic NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Elastic NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Snowflake and Elastic NV

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

The idea behind Snowflake and Elastic 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.