Correlation Between Solana and MITX
Can any of the company-specific risk be diversified away by investing in both Solana and MITX 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 MITX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solana and MITX, you can compare the effects of market volatilities on Solana and MITX 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 MITX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solana and MITX.
Diversification Opportunities for Solana and MITX
Very weak diversification
The 3 months correlation between Solana and MITX is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Solana and MITX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MITX 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 MITX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MITX has no effect on the direction of Solana i.e., Solana and MITX go up and down completely randomly.
Pair Corralation between Solana and MITX
Assuming the 90 days trading horizon Solana is expected to generate 0.62 times more return on investment than MITX. However, Solana is 1.6 times less risky than MITX. It trades about 0.09 of its potential returns per unit of risk. MITX is currently generating about -0.09 per unit of risk. If you would invest 16,833 in Solana on August 27, 2024 and sell it today you would earn a total of 8,687 from holding Solana or generate 51.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solana vs. MITX
Performance |
| Timeline |
| Solana |
| MITX |
Solana and MITX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solana and MITX
The main advantage of trading using opposite Solana and MITX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solana position performs unexpectedly, MITX 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 MITX will offset losses from the drop in MITX's long position.The idea behind Solana and MITX 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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