Correlation Between Alphabet and Soluna Holdings

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

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

Diversification Opportunities for Alphabet and Soluna Holdings

-0.75

Correlation Coefficient

Alphabet  Soluna Holdings

Pay attention - limited upside

The 3 months correlation between Alphabet and Soluna is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and Soluna Holdings Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soluna Holdings Preferred and Alphabet 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 Alphabet Inc Class C are associated (or correlated) with Soluna Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soluna Holdings Preferred has no effect on the direction of Alphabet i.e., Alphabet and Soluna Holdings go up and down completely randomly.

Pair Corralation between Alphabet and Soluna Holdings

Given the investment horizon of 90 days Alphabet Inc Class C is expected to generate 0.71 times more return on investment than Soluna Holdings. However, Alphabet Inc Class C is 1.42 times less risky than Soluna Holdings. It trades about -0.13 of its potential returns per unit of risk. Soluna Holdings Preferred is currently generating about -0.31 per unit of risk. If you would invest  19,963  in Alphabet Inc Class C on November 20, 2024 and sell it today you would lose (1,276) from holding Alphabet Inc Class C or give up 6.39% of portfolio value over 90 days.

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

Alphabet Inc Class C  vs.  Soluna Holdings Preferred

Alphabet Class C

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Alphabet Inc Class C are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting basic indicators, Alphabet may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Soluna Holdings Preferred

Risk-Adjusted Performance

Very Weak

Over the last 90 days Soluna Holdings Preferred has generated negative risk-adjusted returns adding no value to investors with long positions. Even with inconsistent performance in the last few months, the Preferred Stock's technical indicators remain relatively invariable which may send shares a bit higher in March 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Alphabet and Soluna Holdings

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

The idea behind Alphabet Inc Class C and Soluna Holdings Preferred 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.