Correlation Between Solana and SNET

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

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

Diversification Opportunities for Solana and SNET

-0.35

Correlation Coefficient

Solana  SNET

Very good diversification

The 3 months correlation between Solana and SNET is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Solana and SNET in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SNET 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 SNET. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SNET has no effect on the direction of Solana i.e., Solana and SNET go up and down completely randomly.

Pair Corralation between Solana and SNET

Assuming the 90 days trading horizon Solana is expected to under-perform the SNET. But the crypto coin apears to be less risky and, when comparing its historical volatility, Solana is 4.62 times less risky than SNET. The crypto coin trades about -0.08 of its potential returns per unit of risk. The SNET is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  0.07  in SNET on December 30, 2024 and sell it today you would lose (0.03) from holding SNET or give up 45.2% of portfolio value over 90 days.

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

Solana  vs.  SNET

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.

SNET

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SNET are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, SNET exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Solana and SNET

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

The idea behind Solana and SNET 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..