Correlation Between FSN and Solana

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

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

Diversification Opportunities for FSN and Solana

-0.29

Correlation Coefficient

FSN  Solana

Very good diversification

The 3 months correlation between FSN and Solana is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding FSN and Solana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solana and FSN 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 FSN are associated (or correlated) with Solana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solana has no effect on the direction of FSN i.e., FSN and Solana go up and down completely randomly.

Pair Corralation between FSN and Solana

Assuming the 90 days trading horizon FSN is expected to generate 3.09 times less return on investment than Solana. In addition to that, FSN is 1.69 times more volatile than Solana. It trades about 0.04 of its total potential returns per unit of risk. Solana is currently generating about 0.2 per unit of volatility. If you would invest  13,914  in Solana on September 12, 2024 and sell it today you would earn a total of  8,819  from holding Solana or generate 63.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

FSN  vs.  Solana

FSN

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FSN are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, FSN exhibited solid returns over the last few months and may actually be approaching a breakup point.

Solana

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Solana are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady essential indicators, Solana exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FSN and Solana

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

The idea behind FSN and Solana 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.