Correlation Between Solana and Bancor Network

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

Diversification Opportunities for Solana and Bancor Network

0.46
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Solana and Bancor is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Solana and Bancor Network Token in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bancor Network Token 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 Bancor Network. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bancor Network Token has no effect on the direction of Solana i.e., Solana and Bancor Network go up and down completely randomly.

Pair Corralation between Solana and Bancor Network

Assuming the 90 days trading horizon Solana is expected to generate 1.26 times more return on investment than Bancor Network. However, Solana is 1.26 times more volatile than Bancor Network Token. It trades about -0.1 of its potential returns per unit of risk. Bancor Network Token is currently generating about -0.24 per unit of risk. If you would invest  10,054  in Solana on May 21, 2022 and sell it today you would lose (5,980)  from holding Solana or give up 59.48% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Solana  vs.  Bancor Network Token

 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

Bancor Network Token 
Bancor Performance
0 of 100
Over the last 90 days Bancor Network Token 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 Bancor Network Token investors.

Bancor Price Channel

Solana and Bancor Network Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Solana and Bancor Network

The main advantage of trading using opposite Solana and Bancor Network positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solana position performs unexpectedly, Bancor Network 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 Bancor Network will offset losses from the drop in Bancor Network's long position.
The idea behind Solana and Bancor Network Token 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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