Correlation Between Velodrome Finance and Solana
Can any of the company-specific risk be diversified away by investing in both Velodrome Finance 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 Velodrome Finance and Solana into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Velodrome Finance and Solana, you can compare the effects of market volatilities on Velodrome Finance 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 Velodrome Finance with a short position of Solana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Velodrome Finance and Solana.
Diversification Opportunities for Velodrome Finance and Solana
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Velodrome and Solana is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Velodrome Finance and Solana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solana and Velodrome Finance 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 Velodrome Finance 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 Velodrome Finance i.e., Velodrome Finance and Solana go up and down completely randomly.
Pair Corralation between Velodrome Finance and Solana
Assuming the 90 days trading horizon Velodrome Finance is expected to generate 1.88 times more return on investment than Solana. However, Velodrome Finance is 1.88 times more volatile than Solana. It trades about 0.2 of its potential returns per unit of risk. Solana is currently generating about 0.33 per unit of risk. If you would invest 8.63 in Velodrome Finance on August 30, 2024 and sell it today you would earn a total of 3.37 from holding Velodrome Finance or generate 39.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Velodrome Finance vs. Solana
Performance |
| Timeline |
| Velodrome Finance |
| Solana |
Velodrome Finance and Solana Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Velodrome Finance and Solana
The main advantage of trading using opposite Velodrome Finance and Solana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Velodrome Finance 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.| Velodrome Finance vs. XRP | Velodrome Finance vs. Solana | Velodrome Finance vs. Staked Ether | Velodrome Finance vs. Sui |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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