Correlation Between Aave and API3

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Aave and API3 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 API3 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aave and API3, you can compare the effects of market volatilities on Aave and API3 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 API3. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aave and API3.

Diversification Opportunities for Aave and API3

0.27
  Correlation Coefficient

Modest diversification

The 3 months correlation between Aave and API3 is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Aave and API3 in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on API3 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 API3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of API3 has no effect on the direction of Aave i.e., Aave and API3 go up and down completely randomly.

Pair Corralation between Aave and API3

Assuming the 90 days trading horizon Aave is expected to generate 0.72 times more return on investment than API3. However, Aave is 1.38 times less risky than API3. It trades about -0.37 of its potential returns per unit of risk. API3 is currently generating about -0.3 per unit of risk. If you would invest  18,305  in Aave on February 16, 2022 and sell it today you would lose (9,657)  from holding Aave or give up 52.76% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Aave  vs.  API3

 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 June 2022. The current disturbance may also be a sign of long term up-swing for Aave investors.

Aave Price Channel

API3 
API3 Performance
0 of 100
Over the last 90 days API3 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 indicators 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 API3 investors.

API3 Price Channel

Aave and API3 Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Aave and API3

The main advantage of trading using opposite Aave and API3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aave position performs unexpectedly, API3 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 API3 will offset losses from the drop in API3's long position.
The idea behind Aave and API3 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.

Other Complementary Tools

Idea Analyzer
Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas
Go
Technical Analysis
Check basic technical indicators and analysis based on most latest market data
Go
Fundamental Analysis
View fundamental data based on most recent published financial statements
Go
Price Ceiling Movement
Calculate and plot Price Ceiling Movement for different equity instruments
Go
Bollinger Bands
Use Bollinger Bands indicator to analyze target price for a given investing horizon
Go
Bond Analysis
Evaluate and analyze corporate bonds as a potential investment for your portfolios.
Go
Performance Analysis
Check effects of mean-variance optimization against your current asset allocation
Go
Piotroski F Score
Get Piotroski F Score based on binary analysis strategy of nine different fundamentals
Go
Price Transformation
Use Price Transformation models to analyze depth of different equity instruments across global markets
Go
Portfolio Optimization
Compute new portfolio that will generate highest expected return given your specified tolerance for risk
Go
Equity Forecasting
Use basic forecasting models to generate price predictions and determine price momentum
Go
Content Syndication
Quickly integrate customizable finance content to your own investment portal
Go
Portfolio Suggestion
Get suggestions outside of your existing asset allocation including your own model portfolios
Go