Correlation Between Avalanche and FTX Token

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

Diversification Opportunities for Avalanche and FTX Token

0.92
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Avalanche and FTX Token is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Avalanche and FTX Token in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FTX Token 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 FTX Token. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FTX Token has no effect on the direction of Avalanche i.e., Avalanche and FTX Token go up and down completely randomly.

Pair Corralation between Avalanche and FTX Token

Assuming the 90 days trading horizon Avalanche is expected to generate 1.55 times more return on investment than FTX Token. However, Avalanche is 1.55 times more volatile than FTX Token. It trades about -0.03 of its potential returns per unit of risk. FTX Token is currently generating about -0.06 per unit of risk. If you would invest  6,153  in Avalanche on June 27, 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 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Avalanche  vs.  FTX Token

 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

FTX Token 
FTX Token Performance
0 of 100
Over the last 90 days FTX Token has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, FTX Token is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

FTX Token Price Channel

Avalanche and FTX Token Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Avalanche and FTX Token

The main advantage of trading using opposite Avalanche and FTX Token positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avalanche position performs unexpectedly, FTX Token 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 FTX Token will offset losses from the drop in FTX Token's long position.
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The idea behind Avalanche and FTX 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.
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

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