Correlation Between Avalanche and ANKR
Can any of the company-specific risk be diversified away by investing in both Avalanche and ANKR 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 Avalanche and ANKR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avalanche and ANKR, you can compare the effects of market volatilities on Avalanche and ANKR 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 Avalanche with a short position of ANKR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avalanche and ANKR.
Diversification Opportunities for Avalanche and ANKR
Almost no diversification
The 3 months correlation between Avalanche and ANKR is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Avalanche and ANKR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ANKR and Avalanche 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 Avalanche are associated (or correlated) with ANKR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ANKR has no effect on the direction of Avalanche i.e., Avalanche and ANKR go up and down completely randomly.
Pair Corralation between Avalanche and ANKR
Assuming the 90 days trading horizon Avalanche is expected to generate 1.6 times more return on investment than ANKR. However, Avalanche is 1.6 times more volatile than ANKR. It trades about 0.06 of its potential returns per unit of risk. ANKR is currently generating about 0.04 per unit of risk. If you would invest 2,085 in Avalanche on August 27, 2024 and sell it today you would earn a total of 2,045 from holding Avalanche or generate 98.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avalanche vs. ANKR
Performance |
| Timeline |
| Avalanche |
| ANKR |
Avalanche and ANKR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avalanche and ANKR
The main advantage of trading using opposite Avalanche and ANKR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avalanche position performs unexpectedly, ANKR 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 ANKR will offset losses from the drop in ANKR's long position.The idea behind Avalanche and ANKR 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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