Correlation Between Solana and Open Network

Can any of the company-specific risk be diversified away by investing in both Solana and Open 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 Open Network into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Solana and The Open Network, you can compare the effects of market volatilities on Solana and Open 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 Open Network. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solana and Open Network.

Diversification Opportunities for Solana and Open Network

0.72

Correlation Coefficient

Solana  Open Network

Poor diversification

The 3 months correlation between Solana and Open is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Solana and The Open Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Open Network 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 Open Network. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Open Network has no effect on the direction of Solana i.e., Solana and Open Network go up and down completely randomly.

Pair Corralation between Solana and Open Network

Assuming the 90 days trading horizon Solana is expected to under-perform the Open Network. But the crypto coin apears to be less risky and, when comparing its historical volatility, Solana is 1.36 times less risky than Open Network. The crypto coin trades about -0.32 of its potential returns per unit of risk. The The Open Network is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  488.00  in The Open Network on February 1, 2024 and sell it today you would earn a total of  23.00  from holding The Open Network or generate 4.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Solana  vs.  The Open Network

Solana

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Solana are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady essential indicators, Solana exhibited solid returns over the last few months and may actually be approaching a breakup point.

Open Network

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The Open Network are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Open Network displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Solana and Open Network

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

The idea behind Solana and The Open Network 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 the Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.