Correlation Between Solana and AVT

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

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

Diversification Opportunities for Solana and AVT

0.71

Correlation Coefficient

Solana  AVT

Poor diversification

The 3 months correlation between Solana and AVT is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Solana and AVT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AVT and Solana 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 Solana are associated (or correlated) with AVT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AVT has no effect on the direction of Solana i.e., Solana and AVT go up and down completely randomly.

Pair Corralation between Solana and AVT

Assuming the 90 days trading horizon Solana is expected to under-perform the AVT. But the crypto coin apears to be less risky and, when comparing its historical volatility, Solana is 1.25 times less risky than AVT. The crypto coin trades about -0.07 of its potential returns per unit of risk. The AVT is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  225.00  in AVT on December 29, 2024 and sell it today you would lose (49.00) from holding AVT or give up 21.78% of portfolio value over 90 days.

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

Solana  vs.  AVT

Solana

Risk-Adjusted Performance

Very Weak

Over the last 90 days Solana 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 Crypto's essential indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for Solana shareholders.

AVT

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Solana and AVT

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

The idea behind Solana and AVT 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.