Correlation Between Widepoint and Soluna Holdings

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

By analyzing existing cross correlation between Widepoint C and Soluna Holdings Preferred, you can compare the effects of market volatilities on Widepoint and Soluna Holdings 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 Widepoint with a short position of Soluna Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Widepoint and Soluna Holdings.

Diversification Opportunities for Widepoint and Soluna Holdings

0.59

Correlation Coefficient

Widepoint  Soluna Holdings

Very weak diversification

The 3 months correlation between Widepoint and Soluna is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Widepoint C and Soluna Holdings Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soluna Holdings Preferred and Widepoint 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 Widepoint C are associated (or correlated) with Soluna Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soluna Holdings Preferred has no effect on the direction of Widepoint i.e., Widepoint and Soluna Holdings go up and down completely randomly.

Pair Corralation between Widepoint and Soluna Holdings

Considering the 90-day investment horizon Widepoint is expected to generate 2.61 times less return on investment than Soluna Holdings. But when comparing it to its historical volatility, Widepoint C is 1.62 times less risky than Soluna Holdings. It trades about 0.12 of its potential returns per unit of risk. Soluna Holdings Preferred is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  585.00  in Soluna Holdings Preferred on September 1, 2024 and sell it today you would earn a total of  689.00  from holding Soluna Holdings Preferred or generate 117.78% return on investment over 90 days.

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

Widepoint C  vs.  Soluna Holdings Preferred

Widepoint C

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Widepoint C are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Widepoint showed solid returns over the last few months and may actually be approaching a breakup point.

Soluna Holdings Preferred

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Soluna Holdings Preferred are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent technical indicators, Soluna Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Widepoint and Soluna Holdings

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

The idea behind Widepoint C and Soluna Holdings Preferred 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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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.