Correlation Between USD Coin and Aave

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

Diversification Opportunities for USD Coin and Aave

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between USD Coin and Aave is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding USD Coin and Aave in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aave and USD Coin 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 USD Coin 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 USD Coin i.e., USD Coin and Aave go up and down completely randomly.

Pair Corralation between USD Coin and Aave

If you would invest  0.00  in Aave on April 2, 2022 and sell it today you would earn a total of  0.00  from holding Aave or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

USD Coin  vs.  Aave

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

USD Coin and Aave Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with USD Coin and Aave

The main advantage of trading using opposite USD Coin and Aave positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if USD Coin 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.

USD Coin

Pair trading matchups for USD Coin

BP PLC vs. USD Coin
Seneca Foods vs. USD Coin
Cyclacel Pharmaceuti vs. USD Coin
ATT vs. USD Coin
Novan vs. USD Coin
Calyxt vs. USD Coin
Alzamend Neuro vs. USD Coin
Vmware vs. USD Coin
Alphabet vs. USD Coin
International Business vs. USD Coin
GLAXOSMITHKLINE PLC vs. USD Coin
Sentinelone Inc vs. USD Coin
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against USD Coin as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. USD Coin's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, USD Coin's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to USD Coin.
The idea behind USD Coin 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.

Aave

Pair trading matchups for Aave

Seneca Foods vs. Aave
International Business vs. Aave
Vmware vs. Aave
Arca Biopharma vs. Aave
Liquidia Corp vs. Aave
Context Therapeutics vs. Aave
Alphabet vs. Aave
Calyxt vs. Aave
GLAXOSMITHKLINE PLC vs. Aave
Alzamend Neuro vs. Aave
RENEWI PLC vs. Aave
Cyclacel Pharmaceuti vs. Aave
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Aave as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Aave's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Aave's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Aave.
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..

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