Correlation Between Axie Infinity and Solana
Can any of the company-specific risk be diversified away by investing in both Axie Infinity and Solana 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 Axie Infinity and Solana into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axie Infinity Shards and Solana, you can compare the effects of market volatilities on Axie Infinity and Solana 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 Axie Infinity with a short position of Solana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axie Infinity and Solana.
Diversification Opportunities for Axie Infinity and Solana
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Axie and Solana is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Axie Infinity Shards and Solana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solana and Axie Infinity 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 Axie Infinity Shards are associated (or correlated) with Solana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solana has no effect on the direction of Axie Infinity i.e., Axie Infinity and Solana go up and down completely randomly.
Pair Corralation between Axie Infinity and Solana
Assuming the 90 days trading horizon Axie Infinity is expected to generate 1.08 times less return on investment than Solana. In addition to that, Axie Infinity is 1.36 times more volatile than Solana. It trades about 0.28 of its total potential returns per unit of risk. Solana is currently generating about 0.41 per unit of volatility. If you would invest 17,938 in Solana on August 27, 2024 and sell it today you would earn a total of 7,582 from holding Solana or generate 42.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Axie Infinity Shards vs. Solana
Performance |
| Timeline |
| Axie Infinity Shards |
| Solana |
Axie Infinity and Solana Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axie Infinity and Solana
The main advantage of trading using opposite Axie Infinity and Solana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axie Infinity position performs unexpectedly, Solana 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 Solana will offset losses from the drop in Solana's long position.| Axie Infinity vs. Staked Ether | Axie Infinity vs. EigenLayer | Axie Infinity vs. EOSDAC | Axie Infinity vs. BLZ |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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