Correlation Between Solana and 1inch

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Can any of the company-specific risk be diversified away by investing in both Solana and 1inch 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 1inch into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solana and 1inch, you can compare the effects of market volatilities on Solana and 1inch 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 1inch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solana and 1inch.

Diversification Opportunities for Solana and 1inch

0.86
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Solana and 1inch is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Solana and 1inch in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1inch 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 1inch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1inch has no effect on the direction of Solana i.e., Solana and 1inch go up and down completely randomly.

Pair Corralation between Solana and 1inch

Assuming the 90 days trading horizon Solana is expected to generate 1.55 times more return on investment than 1inch. However, Solana is 1.55 times more volatile than 1inch. It trades about 0.22 of its potential returns per unit of risk. 1inch is currently generating about 0.05 per unit of risk. If you would invest  13,366  in Solana on April 22, 2024 and sell it today you would earn a total of  3,570  from holding Solana or generate 26.71% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Solana  vs.  1inch

 Performance 
       Timeline  
Solana 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Solana are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady essential indicators, Solana may actually be approaching a critical reversion point that can send shares even higher in August 2024.
1inch 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days 1inch has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical indicators, 1inch is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Solana and 1inch Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Solana and 1inch

The main advantage of trading using opposite Solana and 1inch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solana position performs unexpectedly, 1inch 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 1inch will offset losses from the drop in 1inch's long position.
The idea behind Solana and 1inch 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

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