Correlation Between SNET and Solana
Can any of the company-specific risk be diversified away by investing in both SNET 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 SNET and Solana into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SNET and Solana, you can compare the effects of market volatilities on SNET 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 SNET with a short position of Solana. Check out your portfolio center. Please also check ongoing floating volatility patterns of SNET and Solana.
Diversification Opportunities for SNET and Solana
Excellent diversification
The 3 months correlation between SNET and Solana is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding SNET and Solana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solana and SNET 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 SNET 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 SNET i.e., SNET and Solana go up and down completely randomly.
Pair Corralation between SNET and Solana
Assuming the 90 days trading horizon SNET is expected to generate 5.68 times more return on investment than Solana. However, SNET is 5.68 times more volatile than Solana. It trades about 0.15 of its potential returns per unit of risk. Solana is currently generating about 0.33 per unit of risk. If you would invest 0.13 in SNET on August 30, 2024 and sell it today you would earn a total of 0.06 from holding SNET or generate 46.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SNET vs. Solana
Performance |
| Timeline |
| SNET |
| Solana |
SNET and Solana Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SNET and Solana
The main advantage of trading using opposite SNET and Solana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SNET 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.The idea behind SNET and Solana pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |