Correlation Between Avalanche and BUSD

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

Diversification Opportunities for Avalanche and BUSD

-0.12
  Correlation Coefficient

Good diversification

The 3 months correlation between Avalanche and BUSD is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Avalanche and BUSD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BUSD 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 BUSD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BUSD has no effect on the direction of Avalanche i.e., Avalanche and BUSD go up and down completely randomly.

Pair Corralation between Avalanche and BUSD

Assuming the 90 days trading horizon Avalanche is expected to under-perform the BUSD. In addition to that, Avalanche is 20.04 times more volatile than BUSD. It trades about -0.13 of its total potential returns per unit of risk. BUSD is currently generating about 0.0 per unit of volatility. If you would invest  100.00  in BUSD on July 2, 2022 and sell it today you would earn a total of  0.00  from holding BUSD or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Avalanche  vs.  BUSD

 Performance (%) 
       Timeline  
Avalanche 
Avalanche Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Avalanche are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Avalanche is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Avalanche Price Channel

BUSD 
BUSD Performance
0 of 100
Over the last 90 days BUSD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, BUSD is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

BUSD Price Channel

Avalanche and BUSD Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Avalanche and BUSD

The main advantage of trading using opposite Avalanche and BUSD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avalanche position performs unexpectedly, BUSD 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 BUSD will offset losses from the drop in BUSD's long position.
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The idea behind Avalanche and BUSD 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.
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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 Piotroski F Score module to get Piotroski F Score based on binary analysis strategy of nine different fundamentals.

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