Correlation Between SOL TOP5 and SOL SP500ESG
Can any of the company-specific risk be diversified away by investing in both SOL TOP5 and SOL SP500ESG 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 TOP5 and SOL SP500ESG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SOL TOP5 Blended and SOL SP500ESG, you can compare the effects of market volatilities on SOL TOP5 and SOL SP500ESG 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 TOP5 with a short position of SOL SP500ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOL TOP5 and SOL SP500ESG.
Diversification Opportunities for SOL TOP5 and SOL SP500ESG
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SOL and SOL is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding SOL TOP5 Blended and SOL SP500ESG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOL SP500ESG and SOL TOP5 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 TOP5 Blended are associated (or correlated) with SOL SP500ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOL SP500ESG has no effect on the direction of SOL TOP5 i.e., SOL TOP5 and SOL SP500ESG go up and down completely randomly.
Pair Corralation between SOL TOP5 and SOL SP500ESG
Assuming the 90 days trading horizon SOL TOP5 Blended is expected to generate 0.62 times more return on investment than SOL SP500ESG. However, SOL TOP5 Blended is 1.62 times less risky than SOL SP500ESG. It trades about -0.23 of its potential returns per unit of risk. SOL SP500ESG is currently generating about -0.18 per unit of risk. If you would invest 1,346,000 in SOL TOP5 Blended on December 25, 2024 and sell it today you would lose (34,500) from holding SOL TOP5 Blended or give up 2.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SOL TOP5 Blended vs. SOL SP500ESG
Performance |
| Timeline |
| SOL TOP5 Blended |
| SOL SP500ESG |
SOL TOP5 and SOL SP500ESG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SOL TOP5 and SOL SP500ESG
The main advantage of trading using opposite SOL TOP5 and SOL SP500ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SOL TOP5 position performs unexpectedly, SOL SP500ESG 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 SP500ESG will offset losses from the drop in SOL SP500ESG's long position.| SOL TOP5 vs. SOL KRX Climate | SOL TOP5 vs. SOL K Global Semiconductor | SOL TOP5 vs. SOL SP500ESG | SOL TOP5 vs. SOL Total Bond |
| 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 |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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