Correlation Between Wrapped Beacon and Solana
Can any of the company-specific risk be diversified away by investing in both Wrapped Beacon 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 Wrapped Beacon and Solana into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wrapped Beacon ETH and Solana, you can compare the effects of market volatilities on Wrapped Beacon 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 Wrapped Beacon with a short position of Solana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wrapped Beacon and Solana.
Diversification Opportunities for Wrapped Beacon and Solana
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Wrapped and Solana is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Wrapped Beacon ETH and Solana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solana and Wrapped Beacon 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 Wrapped Beacon ETH 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 Wrapped Beacon i.e., Wrapped Beacon and Solana go up and down completely randomly.
Pair Corralation between Wrapped Beacon and Solana
Assuming the 90 days trading horizon Wrapped Beacon is expected to generate 37.64 times less return on investment than Solana. But when comparing it to its historical volatility, Wrapped Beacon ETH is 9.05 times less risky than Solana. It trades about 0.02 of its potential returns per unit of risk. Solana is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,357 in Solana on August 30, 2024 and sell it today you would earn a total of 23,119 from holding Solana or generate 1703.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 46.15% |
| Values | Daily Returns |
Wrapped Beacon ETH vs. Solana
Performance |
| Timeline |
| Wrapped Beacon ETH |
| Solana |
Wrapped Beacon and Solana Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wrapped Beacon and Solana
The main advantage of trading using opposite Wrapped Beacon and Solana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wrapped Beacon 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.| Wrapped Beacon vs. XRP | Wrapped Beacon vs. Solana | Wrapped Beacon vs. Staked Ether | Wrapped Beacon 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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