Correlation Between Solana and Clover Finance

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

Diversification Opportunities for Solana and Clover Finance

0.78
  Correlation Coefficient

Poor diversification

The 3 months correlation between Solana and Clover is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Solana and Clover Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clover Finance 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 Clover Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clover Finance has no effect on the direction of Solana i.e., Solana and Clover Finance go up and down completely randomly.

Pair Corralation between Solana and Clover Finance

Assuming the 90 days trading horizon Solana is expected to generate 1.61 times less return on investment than Clover Finance. But when comparing it to its historical volatility, Solana is 1.03 times less risky than Clover Finance. It trades about 0.15 of its potential returns per unit of risk. Clover Finance is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  9.17  in Clover Finance on May 14, 2022 and sell it today you would earn a total of  2.83  from holding Clover Finance or generate 30.86% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Solana  vs.  Clover Finance

 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

Clover Finance 
Clover Performance
0 of 100
Over the last 90 days Clover Finance has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Crypto's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for Clover Finance investors.

Clover Price Channel

Solana and Clover Finance Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Solana and Clover Finance

The main advantage of trading using opposite Solana and Clover Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solana position performs unexpectedly, Clover Finance 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 Clover Finance will offset losses from the drop in Clover Finance's long position.
The idea behind Solana and Clover Finance 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.

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