Correlation Between Avalanche and Ethereum

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

Diversification Opportunities for Avalanche and Ethereum

0.88
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Avalanche and Ethereum is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Avalanche and Ethereum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ethereum 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 Ethereum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ethereum has no effect on the direction of Avalanche i.e., Avalanche and Ethereum go up and down completely randomly.

Pair Corralation between Avalanche and Ethereum

Assuming the 90 days trading horizon Avalanche is expected to under-perform the Ethereum. In addition to that, Avalanche is 1.1 times more volatile than Ethereum. It trades about -0.04 of its total potential returns per unit of risk. Ethereum is currently generating about 0.06 per unit of volatility. If you would invest  55,482  in Ethereum on August 29, 2022 and sell it today you would earn a total of  65,012  from holding Ethereum or generate 117.18% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy56.12%
ValuesDaily Returns

Avalanche  vs.  Ethereum

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

Avalanche Price Channel

Ethereum 
Ethereum Performance
0 of 100
Over the last 90 days Ethereum 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 December 2022. The current disturbance may also be a sign of long term up-swing for Ethereum investors.

Ethereum Price Channel

Avalanche and Ethereum Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Avalanche and Ethereum

The main advantage of trading using opposite Avalanche and Ethereum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avalanche position performs unexpectedly, Ethereum 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 Ethereum will offset losses from the drop in Ethereum's long position.
Avalanche vs. Ethereum
Avalanche vs. XRP
Avalanche vs. Solana
Avalanche vs. Cardano
The idea behind Avalanche and Ethereum 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.
Ethereum vs. Cardano
Ethereum vs. Avalanche
Ethereum vs. Cosmos
Ethereum vs. Cronos
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 Watchlist Optimization module to optimize watchlists to build efficient portfolio or rebalance existing positions based on mean-variance optimization algorithm.

Other Complementary Tools

Alpha Finder
Use alpha and beta coefficients to find investment opportunities after accounting for the risk
Go
Analyst Recommendations
Analyst recommendations and target price estimates broken down by several categories
Go
Watchlist Optimization
Optimize watchlists to build efficient portfolio or rebalance existing positions based on mean-variance optimization algorithm
Go
Portfolio Manager
State of the art Portfolio Manager to monitor and improve performance of your invested capital
Go
Price Ceiling Movement
Calculate and plot Price Ceiling Movement for different equity instruments
Go
Stock Tickers
Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites
Go
Bond Directory
Find actively traded corporate debentures issued by US companies
Go
Content Syndication
Quickly integrate customizable finance content to your own investment portal
Go
Watchlist Optimization
Optimize watchlists to build efficient portfolio or rebalance existing positions based on mean-variance optimization algorithm
Go
Stock Tickers
Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites
Go
Options Analysis
Analyze and evaluate options and option chains as a potential hedge for your portfolios
Go
Insider Screener
Find insiders across different sectors to evaluate their impact on performance
Go