Correlation Between Aave and Ankr Network

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

Diversification Opportunities for Aave and Ankr Network

0.88
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Aave and Ankr Network is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Aave and Ankr Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ankr Network 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 Ankr Network. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ankr Network has no effect on the direction of Aave i.e., Aave and Ankr Network go up and down completely randomly.

Pair Corralation between Aave and Ankr Network

Assuming the 90 days trading horizon Aave is expected to under-perform the Ankr Network. But the crypto coin apears to be less risky and, when comparing its historical volatility, Aave is 1.06 times less risky than Ankr Network. The crypto coin trades about -0.07 of its potential returns per unit of risk. The Ankr Network is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  9.38  in Ankr Network on February 22, 2022 and sell it today you would lose (5.55)  from holding Ankr Network or give up 59.17% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Aave  vs.  Ankr Network

 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 latest weak performance, the Crypto's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for Aave investors.

Aave Price Channel

Ankr Network 
Ankr Network Performance
0 of 100
Over the last 90 days Ankr Network 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 forward-looking signals remain somewhat strong which may send shares a bit higher in June 2022. The current disturbance may also be a sign of long term up-swing for Ankr Network investors.

Ankr Network Price Channel

Aave and Ankr Network Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Aave and Ankr Network

The main advantage of trading using opposite Aave and Ankr Network positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aave position performs unexpectedly, Ankr Network 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 Ankr Network will offset losses from the drop in Ankr Network's long position.
The idea behind Aave and Ankr Network 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.

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