Correlation Between Aave and BitMart Token

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

Diversification Opportunities for Aave and BitMart Token

0.65
  Correlation Coefficient

Poor diversification

The 3 months correlation between Aave and BitMart is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Aave and BitMart Token in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BitMart Token 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 BitMart Token. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BitMart Token has no effect on the direction of Aave i.e., Aave and BitMart Token go up and down completely randomly.

Pair Corralation between Aave and BitMart Token

Assuming the 90 days trading horizon Aave is expected to generate 0.89 times more return on investment than BitMart Token. However, Aave is 1.12 times less risky than BitMart Token. It trades about -0.18 of its potential returns per unit of risk. BitMart Token is currently generating about -0.2 per unit of risk. If you would invest  15,718  in Aave on February 27, 2022 and sell it today you would lose (6,416)  from holding Aave or give up 40.82% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy91.3%
ValuesDaily Returns

Aave  vs.  BitMart Token

 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

BitMart Token 
BitMart Performance
0 of 100
Over the last 90 days BitMart Token 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 primary 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 BitMart Token investors.

BitMart Price Channel

Aave and BitMart Token Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Aave and BitMart Token

The main advantage of trading using opposite Aave and BitMart Token positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aave position performs unexpectedly, BitMart 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 BitMart Token will offset losses from the drop in BitMart Token's long position.
The idea behind Aave and BitMart 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.
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.

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