Correlation Between OriginTrail and Solana

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

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

Diversification Opportunities for OriginTrail and Solana

0.88

Correlation Coefficient

OriginTrail  Solana

Very poor diversification

The 3 months correlation between OriginTrail and Solana is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding OriginTrail and Solana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solana and OriginTrail 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 OriginTrail 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 OriginTrail i.e., OriginTrail and Solana go up and down completely randomly.

Pair Corralation between OriginTrail and Solana

Assuming the 90 days trading horizon OriginTrail is expected to generate 2.03 times less return on investment than Solana. But when comparing it to its historical volatility, OriginTrail is 1.99 times less risky than Solana. It trades about 0.07 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  1,429  in Solana on August 26, 2024 and sell it today you would earn a total of  24,271  from holding Solana or generate 1698.46% return on investment over 90 days.

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

OriginTrail  vs.  Solana

OriginTrail

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in OriginTrail are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, OriginTrail exhibited solid returns over the last few months and may actually be approaching a breakup point.

Solana

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Solana are ranked lower than 18 (%) 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 OriginTrail and Solana

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

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.