Correlation Between Cardano and Solana

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

Diversification Opportunities for Cardano and Solana

0.81
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Cardano and Solana is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Cardano and Solana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solana and Cardano 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 Cardano are associated (or correlated) with Solana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solana has no effect on the direction of Cardano i.e., Cardano and Solana go up and down completely randomly.

Pair Corralation between Cardano and Solana

Assuming the 90 days trading horizon Cardano is expected to generate 0.97 times more return on investment than Solana. However, Cardano is 1.03 times less risky than Solana. It trades about -0.08 of its potential returns per unit of risk. Solana is currently generating about -0.08 per unit of risk. If you would invest  214.00  in Cardano on July 4, 2022 and sell it today you would lose (171.00)  from holding Cardano or give up 79.91% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Cardano  vs.  Solana

 Performance (%) 
       Timeline  
Cardano 
Cardano Performance
0 of 100
Over the last 90 days Cardano has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Cardano is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Cardano Price Channel

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

Cardano and Solana Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cardano and Solana

The main advantage of trading using opposite Cardano and Solana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardano position performs unexpectedly, Solana 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 Solana will offset losses from the drop in Solana's long position.
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The idea behind Cardano and Solana 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.
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.

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