Correlation Between Avalanche and AirSwap

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

Diversification Opportunities for Avalanche and AirSwap

0.89
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Avalanche and AirSwap is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Avalanche and AirSwap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AirSwap 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 AirSwap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AirSwap has no effect on the direction of Avalanche i.e., Avalanche and AirSwap go up and down completely randomly.

Pair Corralation between Avalanche and AirSwap

Assuming the 90 days trading horizon Avalanche is expected to generate 0.73 times more return on investment than AirSwap. However, Avalanche is 1.36 times less risky than AirSwap. It trades about -0.03 of its potential returns per unit of risk. AirSwap is currently generating about -0.03 per unit of risk. If you would invest  6,153  in Avalanche on February 22, 2022 and sell it today you would lose (3,170)  from holding Avalanche or give up 51.52% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Avalanche  vs.  AirSwap

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

Avalanche Price Channel

AirSwap 
AirSwap Performance
0 of 100
Over the last 90 days AirSwap 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 AirSwap investors.

AirSwap Price Channel

Avalanche and AirSwap Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Avalanche and AirSwap

The main advantage of trading using opposite Avalanche and AirSwap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avalanche position performs unexpectedly, AirSwap 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 AirSwap will offset losses from the drop in AirSwap's long position.
The idea behind Avalanche and AirSwap 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.

Other Complementary Tools

Content Syndication
Quickly integrate customizable finance content to your own investment portal
Go
Fundamental Analysis
View fundamental data based on most recent published financial statements
Go
Global Markets Map
Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes
Go
Watchlist Optimization
Optimize watchlists to build efficient portfolio or rebalance existing positions based on mean-variance optimization algorithm
Go
Portfolio File Import
Quickly import all of your third-party portfolios from your local drive in csv format
Go
Balance Of Power
Check stock momentum by analyzing Balance Of Power indicator and other technical ratios
Go
Earnings Calls
Check upcoming earnings announcements updated hourly across public exchanges
Go
Price Ceiling Movement
Calculate and plot Price Ceiling Movement for different equity instruments
Go
Fundamentals Comparison
Compare fundamentals across multiple equities to find investing opportunities
Go
Focused Opportunities
Build portfolios using our predefined set of ideas and optimize them against your investing preferences
Go