Correlation Between Polygon and Solana

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Can any of the company-specific risk be diversified away by investing in both Polygon 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 Polygon and Solana into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Polygon and Solana, you can compare the effects of market volatilities on Polygon 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 Polygon with a short position of Solana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polygon and Solana.

Diversification Opportunities for Polygon and Solana

-0.2
  Correlation Coefficient

Good diversification

The 3 months correlation between Polygon and Solana is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Polygon and Solana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solana and Polygon 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 Polygon 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 Polygon i.e., Polygon and Solana go up and down completely randomly.

Pair Corralation between Polygon and Solana

Assuming the 90 days trading horizon Polygon is expected to generate 0.86 times more return on investment than Solana. However, Polygon is 1.16 times less risky than Solana. It trades about 0.08 of its potential returns per unit of risk. Solana is currently generating about -0.17 per unit of risk. If you would invest  87.00  in Polygon on September 2, 2022 and sell it today you would earn a total of  7.00  from holding Polygon or generate 8.05% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Polygon  vs.  Solana

 Performance (%) 
       Timeline  
Polygon 
Polygon Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Polygon are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Polygon sustained solid returns over the last few months and may actually be approaching a breakup point.

Polygon Price Channel

Solana 
Solana Performance
0 of 100
Over the last 90 days Solana has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Crypto's basic indicators remain somewhat strong which may send shares a bit higher in January 2023. The current disturbance may also be a sign of long term up-swing for Solana investors.

Solana Price Channel

Polygon and Solana Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Polygon and Solana

The main advantage of trading using opposite Polygon and Solana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polygon 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.
Polygon vs. XRP
Polygon vs. Chainlink
Polygon vs. Solana
Polygon vs. Polkadot
The idea behind Polygon 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.
Solana vs. XRP
Solana vs. Polygon
Solana vs. Chainlink
Solana vs. Polkadot
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.

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