Correlation Between Alpaca Finance and AERGO

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

Diversification Opportunities for Alpaca Finance and AERGO

0.96
  Correlation Coefficient

Almost no diversification

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

Pair Corralation between Alpaca Finance and AERGO

Assuming the 90 days trading horizon Alpaca Finance is expected to under-perform the AERGO. But the crypto coin apears to be less risky and, when comparing its historical volatility, Alpaca Finance is 1.1 times less risky than AERGO. The crypto coin trades about -0.07 of its potential returns per unit of risk. The AERGO is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  30.00  in AERGO on April 8, 2022 and sell it today you would lose (17.00)  from holding AERGO or give up 56.67% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Alpaca Finance  vs.  AERGO

 Performance (%) 
      Timeline 
Alpaca Finance 
Alpaca Performance
0 of 100
Over the last 90 days Alpaca Finance 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 August 2022. The current disturbance may also be a sign of long term up-swing for Alpaca Finance investors.

Alpaca Price Channel

AERGO 
AERGO Performance
0 of 100
Over the last 90 days AERGO 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 technical and fundamental indicators remain somewhat strong which may send shares a bit higher in August 2022. The current disturbance may also be a sign of long term up-swing for AERGO investors.

AERGO Price Channel

Alpaca Finance and AERGO Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Alpaca Finance and AERGO

The main advantage of trading using opposite Alpaca Finance and AERGO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alpaca Finance position performs unexpectedly, AERGO 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 AERGO will offset losses from the drop in AERGO's long position.
The idea behind Alpaca Finance and AERGO 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.

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