Correlation Between Audius and Aave

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

Diversification Opportunities for Audius and Aave

0.91
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Audius and Aave is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Audius and Aave in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aave and Audius 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 Audius are associated (or correlated) with Aave. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aave has no effect on the direction of Audius i.e., Audius and Aave go up and down completely randomly.

Pair Corralation between Audius and Aave

Assuming the 90 days trading horizon Audius is expected to generate 1.22 times more return on investment than Aave. However, Audius is 1.22 times more volatile than Aave. It trades about -0.03 of its potential returns per unit of risk. Aave is currently generating about -0.03 per unit of risk. If you would invest  86.00  in Audius on February 22, 2022 and sell it today you would lose (41.00)  from holding Audius or give up 47.67% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Audius  vs.  Aave

 Performance (%) 
      Timeline 
Audius 
Audius Performance
0 of 100
Over the last 90 days Audius 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 Audius investors.

Audius Price Channel

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

Audius and Aave Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Audius and Aave

The main advantage of trading using opposite Audius and Aave positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Audius position performs unexpectedly, Aave 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 Aave will offset losses from the drop in Aave's long position.
The idea behind Audius and Aave 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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