Correlation Between Solana and IQN

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

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

Diversification Opportunities for Solana and IQN

0.48

Correlation Coefficient

Solana  IQN

Very weak diversification

The 3 months correlation between Solana and IQN is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Solana and IQN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IQN 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 IQN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IQN has no effect on the direction of Solana i.e., Solana and IQN go up and down completely randomly.

Pair Corralation between Solana and IQN

Assuming the 90 days trading horizon Solana is expected to under-perform the IQN. In addition to that, Solana is 1.82 times more volatile than IQN. It trades about -0.03 of its total potential returns per unit of risk. IQN is currently generating about 0.03 per unit of volatility. If you would invest  29.00  in IQN on November 19, 2024 and sell it today you would earn a total of  1.00  from holding IQN or generate 3.45% return on investment over 90 days.

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

Solana  vs.  IQN

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 latest unsteady performance, the Crypto's essential indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for Solana shareholders.

IQN

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in IQN are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, IQN is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Solana and IQN

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

The idea behind Solana and IQN 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.