Correlation Between SOL TOP5 and SOL KRX
Can any of the company-specific risk be diversified away by investing in both SOL TOP5 and SOL KRX 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 KRX 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 KRX Climate, you can compare the effects of market volatilities on SOL TOP5 and SOL KRX 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 KRX. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOL TOP5 and SOL KRX.
Diversification Opportunities for SOL TOP5 and SOL KRX
Excellent diversification
The 3 months correlation between SOL and SOL is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding SOL TOP5 Blended and SOL KRX Climate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOL KRX Climate 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 KRX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOL KRX Climate has no effect on the direction of SOL TOP5 i.e., SOL TOP5 and SOL KRX go up and down completely randomly.
Pair Corralation between SOL TOP5 and SOL KRX
Assuming the 90 days trading horizon SOL TOP5 Blended is expected to under-perform the SOL KRX. But the etf apears to be less risky and, when comparing its historical volatility, SOL TOP5 Blended is 2.15 times less risky than SOL KRX. The etf trades about -0.03 of its potential returns per unit of risk. The SOL KRX Climate is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 901,500 in SOL KRX Climate on October 24, 2024 and sell it today you would earn a total of 39,000 from holding SOL KRX Climate or generate 4.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SOL TOP5 Blended vs. SOL KRX Climate
Performance |
| Timeline |
| SOL TOP5 Blended |
| SOL KRX Climate |
SOL TOP5 and SOL KRX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SOL TOP5 and SOL KRX
The main advantage of trading using opposite SOL TOP5 and SOL KRX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SOL TOP5 position performs unexpectedly, SOL KRX 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 KRX will offset losses from the drop in SOL KRX'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 KRX vs. SOL K Global Semiconductor | SOL KRX vs. SOL TOP5 Blended | SOL KRX vs. SOL SP500ESG | SOL KRX 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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