Correlation Between IExec and Solana

Can any of the company-specific risk be diversified away by investing in both IExec 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 IExec and Solana into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iExec and Solana, you can compare the effects of market volatilities on IExec 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 IExec with a short position of Solana. Check out your portfolio center. Please also check ongoing floating volatility patterns of IExec and Solana.

Diversification Opportunities for IExec and Solana

0.66

Correlation Coefficient

IExec  Solana

Poor diversification

The 3 months correlation between IExec and Solana is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding iExec and Solana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solana and IExec 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 iExec 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 IExec i.e., IExec and Solana go up and down completely randomly.

Pair Corralation between IExec and Solana

Assuming the 90 days trading horizon IExec is expected to generate 4.53 times less return on investment than Solana. But when comparing it to its historical volatility, iExec is 3.09 times less risky than Solana. It trades about 0.05 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  1,330  in Solana on August 23, 2024 and sell it today you would earn a total of  22,228  from holding Solana or generate 1671.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

iExec  vs.  Solana

iExec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iExec has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, IExec is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Solana

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Solana are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady essential indicators, Solana exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IExec and Solana

The main advantage of trading using opposite IExec and Solana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IExec 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 iExec 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.

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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 Anywhere module to track or share privately all of your investments from the convenience of any device.