Correlation Between 1inch and Aave

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

Diversification Opportunities for 1inch and Aave

0.96
  Correlation Coefficient

Almost no diversification

The 3 months correlation between 1inch and Aave is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding 1inch and Aave in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aave and 1inch 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 1inch are associated (or correlated) with Aave. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aave has no effect on the direction of 1inch i.e., 1inch and Aave go up and down completely randomly.

Pair Corralation between 1inch and Aave

Assuming the 90 days trading horizon 1inch is expected to generate 0.7 times more return on investment than Aave. However, 1inch is 1.42 times less risky than Aave. It trades about -0.12 of its potential returns per unit of risk. Aave is currently generating about -0.15 per unit of risk. If you would invest  97.00  in 1inch on March 30, 2022 and sell it today you would lose (23.00)  from holding 1inch or give up 23.71% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy95.45%
ValuesDaily Returns

1inch  vs.  Aave

 Performance (%) 
      Timeline 
1inch 
1inch Performance
0 of 100
Over the last 90 days 1inch has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Crypto's fundamental indicators remain somewhat strong which may send shares a bit higher in July 2022. The current disturbance may also be a sign of long term up-swing for 1inch investors.

1inch Price Channel

Aave 
Aave Performance
0 of 100
Over the last 90 days Aave has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Crypto's basic indicators remain somewhat strong which may send shares a bit higher in July 2022. The current disturbance may also be a sign of long term up-swing for Aave investors.

Aave Price Channel

1inch and Aave Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with 1inch and Aave

The main advantage of trading using opposite 1inch and Aave positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 1inch position performs unexpectedly, Aave 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 Aave will offset losses from the drop in Aave's long position.
The idea behind 1inch and Aave 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.

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