Correlation Between Solana and My Neighbor

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

Diversification Opportunities for Solana and My Neighbor

0.73
  Correlation Coefficient

Poor diversification

The 3 months correlation between Solana and ALICE is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Solana and My Neighbor Alice in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on My Neighbor Alice and Solana 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 Solana are associated (or correlated) with My Neighbor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of My Neighbor Alice has no effect on the direction of Solana i.e., Solana and My Neighbor go up and down completely randomly.

Pair Corralation between Solana and My Neighbor

Assuming the 90 days trading horizon Solana is expected to generate 1.43 times less return on investment than My Neighbor. In addition to that, Solana is 1.14 times more volatile than My Neighbor Alice. It trades about 0.17 of its total potential returns per unit of risk. My Neighbor Alice is currently generating about 0.28 per unit of volatility. If you would invest  220.00  in My Neighbor Alice on May 15, 2022 and sell it today you would earn a total of  72.00  from holding My Neighbor Alice or generate 32.73% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Solana  vs.  My Neighbor Alice

 Performance (%) 
       Timeline  
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 latest weak performance, the Crypto's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for Solana investors.

Solana Price Channel

My Neighbor Alice 
ALICE Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in My Neighbor Alice are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, My Neighbor may actually be approaching a critical reversion point that can send shares even higher in September 2022.

ALICE Price Channel

Solana and My Neighbor Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Solana and My Neighbor

The main advantage of trading using opposite Solana and My Neighbor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solana position performs unexpectedly, My Neighbor 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 My Neighbor will offset losses from the drop in My Neighbor's long position.
The idea behind Solana and My Neighbor Alice 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.

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