Correlation Between SOL Total and SOL TOP5
Can any of the company-specific risk be diversified away by investing in both SOL Total 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 Total 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 Total Bond and SOL TOP5 Blended, you can compare the effects of market volatilities on SOL Total 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 Total with a short position of SOL TOP5. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOL Total and SOL TOP5.
Diversification Opportunities for SOL Total and SOL TOP5
Poor diversification
The 3 months correlation between SOL and SOL is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding SOL Total Bond 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 Total 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 Total Bond 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 Total i.e., SOL Total and SOL TOP5 go up and down completely randomly.
Pair Corralation between SOL Total and SOL TOP5
Assuming the 90 days trading horizon SOL Total Bond is expected to generate 0.24 times more return on investment than SOL TOP5. However, SOL Total Bond is 4.11 times less risky than SOL TOP5. It trades about 0.08 of its potential returns per unit of risk. SOL TOP5 Blended is currently generating about -0.01 per unit of risk. If you would invest 11,308,500 in SOL Total Bond on November 4, 2024 and sell it today you would earn a total of 24,000 from holding SOL Total Bond or generate 0.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SOL Total Bond vs. SOL TOP5 Blended
Performance |
| Timeline |
| SOL Total Bond |
| SOL TOP5 Blended |
SOL Total and SOL TOP5 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SOL Total and SOL TOP5
The main advantage of trading using opposite SOL Total and SOL TOP5 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SOL Total 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 Total vs. 453950 | SOL Total vs. Busan Industrial Co | SOL Total vs. Busan Ind | SOL Total vs. Mirae Asset Daewoo |
| 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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