Correlation Between Aave and 1inch

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

Diversification Opportunities for Aave and 1inch

0.98
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Aave and 1inch is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Aave and 1inch in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1inch and Aave 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 Aave 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 Aave i.e., Aave and 1inch go up and down completely randomly.

Pair Corralation between Aave and 1inch

Assuming the 90 days trading horizon Aave is expected to under-perform the 1inch. In addition to that, Aave is 1.4 times more volatile than 1inch. It trades about -0.15 of its total potential returns per unit of risk. 1inch is currently generating about -0.13 per unit of volatility. If you would invest  117.00  in 1inch on April 1, 2022 and sell it today you would lose (50.00)  from holding 1inch or give up 42.74% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy97.73%
ValuesDaily Returns

Aave  vs.  1inch

 Performance (%) 
      Timeline 
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 
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 and 1inch Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Aave and 1inch

The main advantage of trading using opposite Aave and 1inch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aave 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 Aave 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

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