Correlation Between Aave and Basic Attention

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

Diversification Opportunities for Aave and Basic Attention

0.97
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Aave and Basic is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Aave and Basic Attention Token in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Basic Attention Token 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 Basic Attention. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Basic Attention Token has no effect on the direction of Aave i.e., Aave and Basic Attention go up and down completely randomly.

Pair Corralation between Aave and Basic Attention

Assuming the 90 days trading horizon Aave is expected to under-perform the Basic Attention. But the crypto coin apears to be less risky and, when comparing its historical volatility, Aave is 1.04 times less risky than Basic Attention. The crypto coin trades about -0.07 of its potential returns per unit of risk. The Basic Attention Token is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  69.00  in Basic Attention Token on April 1, 2022 and sell it today you would lose (31.00)  from holding Basic Attention Token or give up 44.93% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Aave  vs.  Basic Attention Token

 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

Basic Attention Token 
Basic Performance
0 of 100
Over the last 90 days Basic Attention Token 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 Basic Attention Token investors.

Basic Price Channel

Aave and Basic Attention Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Aave and Basic Attention

The main advantage of trading using opposite Aave and Basic Attention positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aave position performs unexpectedly, Basic Attention 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 Basic Attention will offset losses from the drop in Basic Attention's long position.
The idea behind Aave and Basic Attention Token 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

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