Correlation Between Solana and PRO

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

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

Diversification Opportunities for Solana and PRO

0.82

Correlation Coefficient

Solana  PRO

Very poor diversification

The 3 months correlation between Solana and PRO is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Solana and PRO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PRO 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 PRO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PRO has no effect on the direction of Solana i.e., Solana and PRO go up and down completely randomly.

Pair Corralation between Solana and PRO

Assuming the 90 days trading horizon Solana is expected to generate 1.21 times more return on investment than PRO. However, Solana is 1.21 times more volatile than PRO. It trades about -0.07 of its potential returns per unit of risk. PRO is currently generating about -0.1 per unit of risk. If you would invest  18,887  in Solana on December 29, 2024 and sell it today you would lose (5,941) from holding Solana or give up 31.46% of portfolio value over 90 days.

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

Solana  vs.  PRO

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.

PRO

Risk-Adjusted Performance

Very Weak

Over the last 90 days PRO 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 basic 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 PRO shareholders.

Pair Trading with Solana and PRO

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

The idea behind Solana and PRO 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.