Correlation Between SOL SP500ESG and SOL TOP5
Can any of the company-specific risk be diversified away by investing in both SOL SP500ESG and SOL TOP5 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 SOL SP500ESG and SOL TOP5 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SOL SP500ESG and SOL TOP5 Blended, you can compare the effects of market volatilities on SOL SP500ESG and SOL TOP5 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 SOL SP500ESG with a short position of SOL TOP5. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOL SP500ESG and SOL TOP5.
Diversification Opportunities for SOL SP500ESG and SOL TOP5
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SOL and SOL is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding SOL SP500ESG and SOL TOP5 Blended in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOL TOP5 Blended and SOL SP500ESG 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 SOL SP500ESG are associated (or correlated) with SOL TOP5. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOL TOP5 Blended has no effect on the direction of SOL SP500ESG i.e., SOL SP500ESG and SOL TOP5 go up and down completely randomly.
Pair Corralation between SOL SP500ESG and SOL TOP5
Assuming the 90 days trading horizon SOL SP500ESG is expected to under-perform the SOL TOP5. In addition to that, SOL SP500ESG is 1.58 times more volatile than SOL TOP5 Blended. It trades about -0.03 of its total potential returns per unit of risk. SOL TOP5 Blended is currently generating about -0.03 per unit of volatility. If you would invest 1,366,500 in SOL TOP5 Blended on October 24, 2024 and sell it today you would lose (5,500) from holding SOL TOP5 Blended or give up 0.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SOL SP500ESG vs. SOL TOP5 Blended
Performance |
| Timeline |
| SOL SP500ESG |
| SOL TOP5 Blended |
SOL SP500ESG and SOL TOP5 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SOL SP500ESG and SOL TOP5
The main advantage of trading using opposite SOL SP500ESG and SOL TOP5 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SOL SP500ESG position performs unexpectedly, SOL TOP5 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 SOL TOP5 will offset losses from the drop in SOL TOP5's long position.| SOL SP500ESG vs. SOL KRX Climate | SOL SP500ESG vs. SOL K Global Semiconductor | SOL SP500ESG vs. SOL TOP5 Blended | SOL SP500ESG vs. SOL Total Bond |
| SOL TOP5 vs. SOL KRX Climate | SOL TOP5 vs. SOL K Global Semiconductor | SOL TOP5 vs. SOL SP500ESG | SOL TOP5 vs. SOL Total Bond |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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