Correlation Between Solana and LCX
Can any of the company-specific risk be diversified away by investing in both Solana and LCX 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 Solana and LCX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solana and LCX, you can compare the effects of market volatilities on Solana and LCX 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 Solana with a short position of LCX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solana and LCX.
Diversification Opportunities for Solana and LCX
Modest diversification
The 3 months correlation between Solana and LCX is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Solana and LCX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LCX and Solana 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 Solana are associated (or correlated) with LCX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LCX has no effect on the direction of Solana i.e., Solana and LCX go up and down completely randomly.
Pair Corralation between Solana and LCX
Assuming the 90 days trading horizon Solana is expected to generate 1.31 times more return on investment than LCX. However, Solana is 1.31 times more volatile than LCX. It trades about 0.07 of its potential returns per unit of risk. LCX is currently generating about 0.08 per unit of risk. If you would invest 1,412 in Solana on September 3, 2024 and sell it today you would earn a total of 21,132 from holding Solana or generate 1496.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solana vs. LCX
Performance |
| Timeline |
| Solana |
| LCX |
Solana and LCX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solana and LCX
The main advantage of trading using opposite Solana and LCX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solana position performs unexpectedly, LCX 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 LCX will offset losses from the drop in LCX's long position.The idea behind Solana and LCX 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |