Correlation Between Solana and Balancer

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

Diversification Opportunities for Solana and Balancer

0.87
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Solana and Balancer is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Solana and Balancer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balancer 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 Balancer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balancer has no effect on the direction of Solana i.e., Solana and Balancer go up and down completely randomly.

Pair Corralation between Solana and Balancer

Assuming the 90 days trading horizon Solana is expected to generate 1.62 times less return on investment than Balancer. But when comparing it to its historical volatility, Solana is 1.06 times less risky than Balancer. It trades about 0.19 of its potential returns per unit of risk. Balancer is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  416.00  in Balancer on May 12, 2022 and sell it today you would earn a total of  181.00  from holding Balancer or generate 43.51% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Solana  vs.  Balancer

 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 somewhat strong basic indicators, Solana is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Solana Price Channel

Balancer 
Balancer Performance
0 of 100
Over the last 90 days Balancer 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 September 2022. The current disturbance may also be a sign of long term up-swing for Balancer investors.

Balancer Price Channel

Solana and Balancer Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Solana and Balancer

The main advantage of trading using opposite Solana and Balancer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solana position performs unexpectedly, Balancer 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 Balancer will offset losses from the drop in Balancer's long position.
The idea behind Solana and Balancer 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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