Correlation Between Avalanche and Bounce Finance

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

Diversification Opportunities for Avalanche and Bounce Finance

0.79
  Correlation Coefficient

Poor diversification

The 3 months correlation between Avalanche and Bounce is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Avalanche and Bounce Finance Governance Toke in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bounce Finance Gover 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 Bounce Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bounce Finance Gover has no effect on the direction of Avalanche i.e., Avalanche and Bounce Finance go up and down completely randomly.

Pair Corralation between Avalanche and Bounce Finance

Assuming the 90 days trading horizon Avalanche is expected to generate 0.82 times more return on investment than Bounce Finance. However, Avalanche is 1.21 times less risky than Bounce Finance. It trades about -0.03 of its potential returns per unit of risk. Bounce Finance Governance is currently generating about -0.05 per unit of risk. If you would invest  6,153  in Avalanche on June 26, 2022 and sell it today you would lose (4,301)  from holding Avalanche or give up 69.9% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Avalanche  vs.  Bounce Finance Governance Toke

 Performance (%) 
       Timeline  
Avalanche 
Avalanche Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Avalanche are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Avalanche sustained solid returns over the last few months and may actually be approaching a breakup point.

Avalanche Price Channel

Bounce Finance Gover 
Bounce Performance
7 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Bounce Finance Governance are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward indicators, Bounce Finance disclosed solid returns over the last few months and may actually be approaching a breakup point.

Bounce Price Channel

Avalanche and Bounce Finance Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Avalanche and Bounce Finance

The main advantage of trading using opposite Avalanche and Bounce Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avalanche position performs unexpectedly, Bounce Finance 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 Bounce Finance will offset losses from the drop in Bounce Finance's long position.
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The idea behind Avalanche and Bounce Finance Governance 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.
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.

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