Correlation Between Solana and CRDTS

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

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

Diversification Opportunities for Solana and CRDTS

0.11

Correlation Coefficient

Solana  CRDTS

Average diversification

The 3 months correlation between Solana and CRDTS is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Solana and CRDTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CRDTS 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 CRDTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CRDTS has no effect on the direction of Solana i.e., Solana and CRDTS go up and down completely randomly.

Pair Corralation between Solana and CRDTS

Assuming the 90 days trading horizon Solana is expected to generate 0.44 times more return on investment than CRDTS. However, Solana is 2.27 times less risky than CRDTS. It trades about 0.23 of its potential returns per unit of risk. CRDTS is currently generating about 0.06 per unit of risk. If you would invest  12,939  in Solana on September 4, 2024 and sell it today you would earn a total of  9,605  from holding Solana or generate 74.23% return on investment over 90 days.

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

Solana  vs.  CRDTS

Solana

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Solana are ranked lower than 18 (%) 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.

CRDTS

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CRDTS are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, CRDTS exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Solana and CRDTS

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

The idea behind Solana and CRDTS 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..